The rise in oil prices from below $30 to near $50 was supposed to light a fire on manufacturing in the oil producing states. It didn’t.
Bloomberg Econoday reports ….
Highlights
The Dallas manufacturing production index fell into negative territory with a reading of minus 13.1 from a positive 5.8 reading in April. At the same time, the May general activity index sank to minus 20.8 from minus 13.9 last time. This was the 17th consecutive negative reading.
New orders also fell back into negative territory. After popping up 6.2 in April after four consecutive declines, new orders dropped to a reading of minus 14.9. Employment remains weak, at minus 6.7 for a fifth straight contraction. Price data showed some life with wages up and raw materials, which had been week, also up. Selling prices, however, remain a negative, at minus 3.3, an improvement from minus 6.6 in April.
The ongoing recovery for oil is having a positive effect on energy prices and is likely to have a wider positive effect for the Texas manufacturing area eventually. However, this report is a setback.
Three Questions
- Is “setback” the right word for this disaster?
- What happens if oil stays at $50?
- What happens if oil heads back to $40?
Mike “Mish” Shedlock
4. what happens if oil heads back to $30?
I have no doubt that Wall Street is moving heaven and earth to keep oil up until they can extricate themselves from holding energy related debt. Once new bagholders found … reality returns … ie: all the oil parked offshore in supertankers comes ashore.
Does manufacturing decline because of “free trade”?
Of course … if you are talking “free trade”.
…
“If China wanted to give steel, glass, and copper away for free, we should gladly accept the offer. The price of a car would plunge as would the price of anything with those components.”
I don’t know where to even start with this Mish comment. I’ll be charitable and say Mish playing checkers in an economic war chess world. For starters, who is to say the cost savings even passed along to consumers? Much, if not all, likely pocketed by corporation shareholders … exacerbating further wealth inequality.
And, of course, once China driven those US sectors of industry into oblivion … here comes the price increases ….
So accept their “free” goods regardless of if it leads to massive unemployment here? Have we already enjoyed enough of a “good deal” yet?
Can you please think?
We lost huge numbers of candy making jobs because of sugar tariffs.
If we protect steel makers – car makers risk being undercut by Japan.
Please read this post as many times as it takes for you to understand how stupid your argument is.
http://www.acting-man.com/?p=45102
Of course if you simply want to pay higher prices, then pay list prices everywhere
Mish
You are the one not thinking.
Millions of jobs have left the US … and millions more will leave if your vision of “free trade” continues.
Cheap prices mean nothing if you have no job/money.
I’ve followed your argument for quite a while …. lacks depth … no vision on “end game”*
*One point you made a while back was “free trade” will lead to many more shipping jobs … but lately you’ve been pushing driver less trucks technology. Need to square your position.
Finally, I’m not stating that US needs to unilaterally throw up trade barriers and go for isolation … only in response to explicit foreign government subsidy of industry meant to undermine US workers.
Disaster? Nah, it ain’t a disaster until the fed says so.
They are now the economy. All they need do is announce some kind of WPA where every citizen gets $10,000 with a 60 daytime limit to spend it. Or something like that,,,,,and don’t for a nano second believe they won’t do it.
In a scenario of “government by emergency” nothing in the private sector matters, and that’s where this all ends.
helicopter money comes from the legislative body … not the “fed”.
It will NEVER work. I won’t bore you with the details (unless you want me too).
Despite the PR shale isn’t profitable at 50.