Monday, March 06, 2006

Factory Orders

Big overall decline, but not as bad as it looks. November numbers for aircraft really skewed the numbers in the first place. The worst of the News was in the decline of Machinery orders. The references being made to Year 2000 confuse, rather than help economic analysis--We are not where We were then. There We faced a young age in the Durable Products arena, with People capable of slow Turnover; now, We are more in line for scheduled replacements. The OECD senses about the same thing as I.

The real cause for worry is in the area of Defense spending. Marginal cutdowns in Defense spending reflect in almost a 2% decline in Orders. Even Republicans are beginning to realize We will have to cut fundamental Defense spending, and probably before the end of this Bush's administration--the Federal bill is adding up too quickly, especially as Proscription D plans come online. Other areas of Federal Spending Cuts will affect just as badly--Infrastructure construction and Pork Barrel. Loss of Corporate support is the only element forestalling a Federal Downsizing of Expenditures, and the Numbers are beginning to embarrass even Bush.

Is there much need for worry?

The Economy is sound, but Federal Spending is not! Reduction in Federal Spending will curtail the volume of economic performance, but not the provision of Goods to the Private Sector; there, it will actually minimize inflationary pressure and lower the Cost of Resources. Most Economists would disagree with myself, but I would even expect a rise in the Labor Roll; business would add Employees to capture Product volume Sales. The lack of Machinery orders, though, means Outsourcing is still advancing while Business is still not seeking to expand their Consumer Product lines. The Dice are still rolling! lgl

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