Friday, May 14, 2004

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Good signs of economic recovery

Virginia Postrel provides useful links suggesting that the two traditional harbingers of the American economy -- California and small businesses -- are feeling the positive effects of the recovery. From the California story:

Overall, California businesses exported $27.1 billion worth of goods in the quarter, with an array of high- and low-tech product categories seeing substantial gains. Exports of iron and steel products jumped 60%, nuts and fruits were up 33%, and sports equipment and games rose 9%. California-made apparel was one of the few items that saw a significant decline in exports.

Across industries, one common thread tied many companies' increases in exports: China.

In the second half of last year, China became California's fourth-largest export destination, moving ahead of South Korea. The activity has since accelerated, as China's rapid industrialization and production are generating a huge appetite for commodities and consumer goods.

UPDATE: Bloomberg has some great news about industrial production as well. This is the most intriguing paragraph:

Inventories at U.S. businesses grew 0.7 percent in March to a record level, the Commerce Department reported today, while sales rose 2.9 percent, the biggest jump ever. That brought the ratio of inventories to sales at manufacturers, wholesalers and retailers down to 1.30 months, the lowest on record.

LAST UPDATE: The National Federation of Independent Business summarizes their Small Business Economic Trends for May by saying: "Small-business owners are laying the foundation for what could be the best economy in 20 years."

posted by Dan on 05.14.04 at 12:59 PM


The signs of the economic recovery are numerous. However, it will take a little longer until many Americans realize how well things have turned around. The major media have unfortunately done a splendid scaring the crap out of everyone. One recent poll showed that a very high percentage of our fellow citizens continue to be very pessimistic. We must never forget that these never ending news stories concerning the recent economy were missing when Democrat Bill Clinton was running for office. This is another example why one should hold the liberal media in utter contempt.

posted by: David Thomson on 05.14.04 at 12:59 PM [permalink]

In addition, Union Pacific reports increased traffic in their railyards:,1,6654740.story?coll=la-headlines-business

posted by: Kevin Drum on 05.14.04 at 12:59 PM [permalink]

how likely is it that the California uptick will be duplicated anywhere else but the West Coast,if it is really due to increased exports to China ?

posted by: ch2 on 05.14.04 at 12:59 PM [permalink]

“how likely is it that the California uptick will be duplicated anywhere else but the West Coast,if it is really due to increased exports to China ?”

This is a most peculiar question. Why would anyone think that the wealth won’t be spread around to the other surrounding states? Have the Chinese restricted their purchases solely to California?

posted by: David Thomson on 05.14.04 at 12:59 PM [permalink]

Now David,
you're being silly (and unnecessarily snarky).
The exporting ports are in California (West Coast generally). It's cheaper to produce some of the exporting goods near the shipping point, plus the shipping itself is a source for jobs. So my question remains.

posted by: ch2 on 05.14.04 at 12:59 PM [permalink]

California may have the shipping ports, but other states would still have products to offer the Chinese. Virtually everyone should get a piece of this pie.

I also read a few days ago that one poll has John Kerry leading President Bush in California by only one point! If this is accurate, Kerry has some serious problems. The Democrat nominee should be able to take California for granted.

posted by: David Thomson on 05.14.04 at 12:59 PM [permalink]

The CA economy is picking up: I got a cold call from a hi-tech recruiter for the first time since the end of the boom.

posted by: Andrew J. Lazarus on 05.14.04 at 12:59 PM [permalink]

Yes David it's all the media's fault.

The fact that we are still in negative terriroty jobs-wise (what most people care about) and that many have lost relatively high-paying jobs and replaced them with low-paying ones means notyhing.

it's just the media's fault.

posted by: GT on 05.14.04 at 12:59 PM [permalink]

It's not at all obvious that we are in negative territory job-wise. Just because Krugman and Kerry keep saying doesn't make it true. (Rather the opposite, I would say.) And if someone has data showing that "high-paying" jobs are being replace by "low-paying" ones just because factory and manufacturing jobs are being replaced by service sector jobs, I'd like to see it.

Not all jobs listed as manufacturing are either high-paying or making anything. Likewise, service sector jobs are not all burger-flipping. My brother, some years ago, left a job as a sales manager in a "manufacturing industry" to set up shop as a one-man head hunter for hospital imaging sales personnel. He wasn't replaced. So, a job paying about $60,000 (at the time) + benefits was "lost" and it was replaced by a service sector, unreported (he worked out of his home) "low-paying" job. (He made $100,000+ per year, but only because he tended to stop working as soon as he made 100 grand and spend time with this kids. Sometimes this happened in May and sometimes not til October. Some burger-flipping.)

Stuff like this just doesn't show up. There are at least 7 "retired" former manufacturing industry types on my block. I know that 5 of them have home businesses, and all seem to be doing well. Where are they reported? This may be anecdotal, but it's real. Maybe, just maybe, it's time we changed our metric. (Probably not, that would ruin Kerry's best argument.)

posted by: JorgXMcKie on 05.14.04 at 12:59 PM [permalink]

“And if someone has data showing that "high-paying" jobs are being replace by "low-paying" ones just because factory and manufacturing jobs are being replaced by service sector jobs, I'd like to see it.”

The liberal media are deceitful. They will minimize the good economic news and continue implying that Americans are hurting. There are no legitimate reasons why President Bush is down in the polls regarding the nation’s economy. Bill Clinton never endured similar attacks while running for reelection for his second term. For God’s sake, when has a president ever been threatened with political defeat when the unemployment rate was under six percent? Could somebody point to even one example?

posted by: David Thomson on 05.14.04 at 12:59 PM [permalink]

Actually I don't think that the economy is hurting Bush that much, at least his approval numbers didn't seem to drop even in the worst of the doldrums. As far as I'm concerned, the recession was cyclical, the job losses unfortunately from structural competitive factors, and the worst thing that GWB did was try to implement botched trade interventions and a badly written NCLB that didn't address the real long term issues with the American labor pool - as well as his structural deficit spending which will eventually have to be dealt with one way or another.

However in the short run, he did no harm if not much good. Most of the problems in the economy are the ones inherited from the Rubinomics programme held over from Clinton. If John Kerry get's elected since he's promising to return the acolytes of Rubin and perhaps Rubin himself to Fed chief may be the single greatest threat in the short term to the economy. However if GWB get's elected and continues his borrow-and-spend ways the long term problem should be greater.

The real issues aren't fundmentally ones of "free trade" but simply competetive trade. We are losing jobs through trade, and these job losses are greater than the job gains, but the real fault is a flaw with the ideals - it's simply that the facts don't conform to the ideals being cited and there's a stronger competitive factor at work.

As far as I can tell from the polls, it's GWB's foreign policy and its percieved successfullness that seems to be driving his poll numbers. Iraq is the albatross about his neck, and I think there must be some sort of temptation to try cutting and running this July if his polls numbers continue sinking.

posted by: Oldman on 05.14.04 at 12:59 PM [permalink]

It does seem that, across the board, it's the small companies -- and I mean the truly small, locally oriented, and non-globalization-fetishistic that are growing and hiring.

(Of course, this is possibly because so much living-wage labor has been laid off by large corporations that they are now willing to work for the barely-surviving wages that small companies can afford to offer.)

Is it because small companies have not lost the down-to-earth foresight that large companies with ivory-tower executives have lost long ago, and that so many once-small companies magically forgot about once they opened a sales office in a different country?

There's some other points here.

1. Small companies are much less capable of offshoring labor, even if the labor they are using *could* be done offshore -- the logistics are just not practical. One has to admit some irony there. (I could also theorize that small companies care more about local people than sheltered executives in remote offices at larger companies, but that's a bit too philosophical for the audience here.)
2. It can't be that small companies are taking more risks. The author of the small business article admits his tendency to be very skeptical of politi-economic changes, which should put him behind the risk-taking curve.

I'm pro- small business (if I'm ever pro-business), so if small business are the ones that can see the value of investment and in their local economies, good for them.

we struggled to deliver a high volume of production with a skimpy staff. Too often service has suffered. One customer-service person even gave up calling customers to warn them their products would be late. She got so burned out

I thought that was what pro-downsizing executives and economists referred to as "increased productivity". Sheesh, now someone acknowledges that human capital is not an infinitely squeezable resource? (Especially when during the bubble, quite a lot of labor, though paid much better, was often still onerously overworked?)

Executives will look at their books (and their bonuses) and cheer the economic recovery. I for one will continute to watch my paycheck, and the employment status of others in my family and social circles. Criticize this POV all you want, but it matters.

And frankly, the stories Dan posts as an attempt to vindicate his position seem to vindicate the opposing positions much better.

posted by: Keith Tyler on 05.14.04 at 12:59 PM [permalink]

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