May 2, 2007

About the Latest Blogad from the Business and Media Institute

Filed under: General — Tom @ 11:32 am

I am thankful to the Business and Media Institute (BMI) for the Blogad you will see for the rest of this week in the right adstrip.

In 1992, BMI became the first outfit “devoted solely to analyzing and exposing the anti-free enterprise culture of the media.” There are many other good ones today, but BMI is still the best.

Click on the Link to the “Media on Drugs” or any of the individual story links (continually updated) to sample their work. Maybe if they get enough visitors, they’ll come back for more. :–>

NY Times ‘Manufacturing Recession’ Enters Third Month; In Real World, It’s Expanding

Question: When is a New York Times “Manufacturing Recession” not a recession?

Answer: When the Institute for Supply Management (ISM) keeps on issuing monthly reports, such as the one yesterday covering April, telling us that manufacturing is in expansion mode.

On February 28 (second item at link), Times Business writer David Leonhardt wrote the following:

For Manufacturing, a Recession Has Arrived

The nation’s manufacturing sector managed to slip into a recession with almost nobody seeming to notice. Well, until yesterday.

To this day, Leonhardt appears to be the only person to “notice” the recession in manufacturing — because it doesn’t exist.

The TimesSelect current tease for Leonhardt’s article, which is now behind the Times’ subscription firewall, is even worse, leading one to think that it tells us that the whole economy is in recession (bolds are mine):

ECONOMIX; Manufacturing Slips Quietly Into Recession

David Leonhardt column on Commerce Department report that durable goods plunged 8 percent in January, pushing country into recession; says report seems to focus on investors’ attention on problems in manufacturing and became one more reason for people to sell stocks …..

(Aside: Great call on the stock market, eh?)

Fortunately for America’s real economy, the Times, and Leonhardt, were wrong on February 28. They have been wrong ever since. In the ISM’s report on manufacturing for April, its closely watched Purchasing Managers Index (PMI) came in at 54.7. Any reading over 50 indicates expansion.

April was the third straight month of manufacturing expansion, after two of the previous three months (Nov. 2006 and Jan. 2007) had shown slight contractions.

The habit of reality beating analysts’ predictions continues. The Associated Press reported that expectations had been that the PMI reading would come in at 51, barely above March’s 50.9. The April result blew away those forecasts.

See for yourself: The PMI has been in expansion mode in 45 of the past 47 months. You would have to go back to the mid- to late-1970s to see a period of greater manufacturing strength than this economy has exhibited in the past four years.

Maybe the problem at the Old Grey Lady is that it can’t see past the “recession” taking place in its own business. The Times’ daily and Sunday circulations fell 1.93% and 3.37%, respectively, in the six months ended March 31. Maybe a big reason for those declines is that the paper continues to pretend there’s a recession when there isn’t one. From all appearances, based on this search, the paper has never retracted Leonhardt’s claim.

Cross-posted at

Couldn’t Help But Notice (050207)

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 6:18 am

I blame Bush:

Personal income increased $79.9 billion, or 0.7 percent, and disposable personal income (DPI) increased $65.5 billion, or 0.7 percent, in March, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $24.4 billion, or 0.3 percent. In February, personal income increased $74.9 billion, or 0.7 percent, DPI increased $62.3 billion, or 0.6 percent, and PCE increased $69.2 billion, or 0.7 percent based on revised estimates.

Uncompounded, personal income and disposable income in the five months from November 2006 to March 2007 went up 3.3% and 3.0%, respectively, beating the daylights out of inflation during that same period.


From the Economic “Ouch” Department — In an article about the business environment in Indiana and it growing high-tech sector, one entrepreneur had this to say:

“I do business in Indiana, Ohio and Illinois, and of those three states, Indiana is by far the easiest to do business in,” she said. “The taxes are lower, there aren’t as many taxes, and there’s not as much administrative work.”


One of these days, judges are going to get serious about sanctioning lawyers, legal groups, and in this case, the government, for bringing already-settled matters up again for judicial review. The EEOC’s decision to go after the Salvation Army over the same issue yet again seems to virtually cry out for judicial discipline:

Jim Boulet, executive director of English First, is appalled by the recent decision of the Boston Office of the EEOC to file suit against the Salvation Army for firing two employees who refused to learn English. The Christian social service organization had given the two women one year to get proficient in the language and to speak only English in the workplace.

….. a federal judge in Boston upheld the Salvation Army’s English policy in a similar case in 2003. The organization “was sued for this very same policy — in the very same courtroom — and won,” he notes; and yet, “the EEOC, with your tax money and mine, is making the Salvation Army defend again its policy of trying to encourage people to seize the opportunity that America has to offer by learning English.

Of course, the idea is to wear down the opponent. EEOC has virtually unlimited taxpayer funds. The Salvation Army is forced to divert administrative time, effort, and expense from its charitable efforts to defend itself. It’s not a fair fight, and I suspect that most others would fold — which is why judges have to step in with sanctions when suits in already-settled matters like these are brought before them.


Hugo Chavez has upped the ante:

President Hugo Chavez’s government took over Venezuela’s last remaining privately run oil fields Tuesday, intensifying a decisive struggle with Big Oil over one of the world’s most lucrative deposits.

….. The stakes are high for both sides.

If he (Chavez) can persuade the foreign companies to stay, Venezuela will be on track to develop the planet’s largest known oil deposit and possibly surpass Saudi Arabia as the nation with the most reserves. But if he scares them away, the Orinoco River region could end up starved of the investment and know-how needed to transform the Orinoco’s tar-lake crude into marketable crude oil.

While Chavez says state firms from China, India and elsewhere can step in, industry experts doubt they are qualified.

I can think of worse strategies than calling Hugo’s bluff.

WSJ: Don’t Forget about Inflation

Filed under: Economy,Taxes & Government — Tom @ 6:13 am

From a Saturday editorial that channels Don Luskin:

If there’s a real red flag in yesterday’s economic data, it’s the inflation numbers. The personal-consumption expenditures deflator–the inflation measure used to derive real economic growth from the nominal figure–rose at a 3.4% rate in the first quarter. The “core” number, which excludes food and energy prices, rose by 2.2%, still above the Federal Reserve’s comfort range. The core number has now been above 2% for more than a year, and the inflation expectation for the coming year, as measured by the Bureau of Labor Statistics, is above 3%.

There’s still too much underlying strength in the economy to call this stagflation; it looks more like “growthflation,” to borrow a phrase from economist Michael Darda. The Fed has been betting that slower growth would bring inflation down, thus vindicating its decision to stop raising interest rates last year. But we all learned in the 1970s, or should have, that inflation can coexist with slower growth.

Inflation is a monetary phenomenon, and bringing it under control means creating fewer dollars. We doubt the Fed will find much inflation comfort in Friday’s data, and it shouldn’t. With gold near $700 an ounce and the dollar hitting record lows against the euro, the danger is too much dollar liquidity, not too little. The Fed has been hoping to see how bad the housing slump gets before it considers further tightening, but in the meantime price pressures have been building and dollars are sloshing around the world. As we said last year, we think the Fed would have done better had it not gone on “pause.”

The stock market closed basically flat on Friday, suggesting that the headline GDP weakness didn’t spook anyone much. The Dow’s march into record territory this week signals that investors believe that the economy will emerge from this inflationary period intact. But Wall Street’s professional economists have been underestimating the inflationary threat since this cycle began. There’s no sign that this has changed, which means that the further tightening that the Fed will likely have to come to grips with may come as a rude awakening to some Wall Street pros.

All of which is another reason that this is exactly the wrong moment for Congress to be toying with tax increases and protectionism. The 2010 expiration of the 2001 and 2003 tax cuts is looming ever-larger as an economic question mark. We can expect to feel the effects of that event long before New Year’s Day, 2011. Tax rates affect decisions throughout the economy, and unless those cuts are made permanent, or a pro-growth tax reform is put in place to replace them, their expiration will influence economic activity before that day arrives. Economic decision-makers, like the markets, try to look forward, rather than back.

I think we might see the negative impact of the looming tax cut expiration (i.e., the huge, looming tax increase) as early as the middle of next year — just in time for presidential campaign crunch time, and just in time for tax-hungry politicians to blame it everything but the real cause.

April Vehicle Sales: Ford in Deep Denial Over AFA Boycott, with Old Media’s Help

In an unusual move last Friday, Ford decided that it couldn’t wait for the month to end before it told us how bad it was going to be — for the whole industry:

Ford Motor Co. said on Friday that U.S. auto industry sales to date in April were “terrible” as consumer confidence was hit by a slow housing market and rising gas prices.

….. Pipas said industry volume appeared to be down 10 percent to date before seasonal adjustment, but expected Ford’s U.S. retail share to hold steady around 13 percent.

After an entire weekend where Pipas’s message was spread virtually without criticism, the April vehicle-sales reality turned out to be quite different (the first figure is adjusted for the two-day difference in the number of “selling days” in April 2007 [24] vs. April 2006 [26]; the second figure in parens is not adjusted for that difference) –
- General Motors: -2.2% (-9.5%)
- Toyota: +3.7% (-4.3%)
- Ford: -5.7% (-12.9%)
- Daimler Chrysler: +1.3% (the unadjusted decline number didn’t seem correct)
- Honda: -1.6% (-9.1%; obtained from another source)
- Nissan: -11.1% (-18%)

Though there is certainly little to celebrate, the only two “terribles” I see in this list are Ford and the much smaller Nissan.

It appears that Ford and Pipas were playing a “let’s get ahead of the bad news” gambit last Friday. “Clever” — More likely than not, people who are paying only passing attention to the news now think that the entire industry is in the tank, when the truth is that Ford’s suffering is disproportionate in comparison to most of the other makers, even the other members of the old Big Three.

You almost have to feel for Mr. Pipas. He surely must know that he can only play the misdirection card he used this past weekend one time, and that his credibility has just taken a beating. But what do you do when your employer makes dumb moves like this in the teeth of a growing boycott (with just over 700,000 petition signers, according to the American Family Association’s home page) that is keeping 10% or more of potential buyers (likely some of the most profitable ones) away from its showrooms, and you’re the poor guy who has to scramble to come up with reasons other than the boycott for a sales plunge?

For now, Pipas can count on Old Media not to attribute any of Ford’s difficulties to the American Family Association boycott. The Associated Press was so hard-pressed to explain Ford’s situation that one of its reports led with a statement that could have come straight from the “Department of Redundancy Department”:

Ford Motor Co. on Tuesday reported dismal U.S. sales in April, 12.9 percent below the same month last year due largely to slumping car sales. Anlaysts expect lower sales industrywide for the month.

The trouble with that statement is that trucks were “slumping” by almost the same percentage as the company’s overall sales:

Ford’s F-series pickup trucks, traditionally the top-selling vehicles in the U.S., were down 12.4 percent in April.

I get the sense that Ford’s media friends know that if that the seeming taboo against giving the AFA boycott any visibility ever gets busted, the company will be forced to immediately tackle the problem and defuse the boycott (we can’t have that!), or it will quickly be look-out-below time in Dearborn. In the meantime, the not-so-slow bleed continues to do damage — possibly permanent — to the automaker’s long-term prospects.

Wal-Mart, when faced last year with a post-Thanksgiving shopping boycott by AFA, solved their problem and formally abandoned the “corporate social responsibility” nonsense, along with the baggage it brought. The retailer appears to have suffered no serious consequences for having done so. When are Alan “$28 Million” Mullally and his executive team going to wake up?

Cross-posted at

Positivity: Dog Saves 82 Year-Old Woman’s Life

Filed under: Positivity — Tom @ 5:58 am

From Silverton, Oregon, as told by the woman saved:

Woman retells the story of how her dog saved her life
Now Silverton woman searches for a new home for her dog

April 25

SILVERTON – When 82-year-old Virginia Ball stepped outside of her Silverton home on the evening of April 5, she was hoping her dog Katie would make a quick trip to the bathroom. She never expected it to become a long ordeal that caused her to fear for her life.

“I was getting along just fine and the next thing I knew I fell flat on my face and I couldn’t get up,” Virginia said. “There I was on the ground and I couldn’t raise my little hand. I didn’t know if anybody could see me or hear me.”

Ball had gotten Katie as a companion in early December from Marion County Dog Control and Shelter.

Outside, the warm air was beginning to cool as the clouds began to slowly work their way in from the coast.

Virginia was several hundred feet from the road and houses were far apart. She didn’t know if city workers would come to the city shops behind her the next day and if they did, if they would even see her.