The bold headline read as follows: “Supply execs see growth continuing”, and following that intro, these same “execs” predicted:
• “Economic growth in the U.S. will strengthen … the nation’s purchasing and supply executives said in the 68th Semiannual Economic Forecast by the Institute for Supply Management.”
• “Expectations … are higher in both the manufacturing and nonmanufacturing sectors, and both sectors are more optimistic about the coming year than they were one year ago … The overall prediction is for economic growth to continue at a relatively strong level….”
• “Manufacturers have an expectation that employment in the sector will grow by 1.6 percent.”
• “Manufacturing purchasers are predicting growth in exports and imports. They also expect the U.S. dollar to strengthen somewhat against currencies of major trading partners.”
Sounds stupid, right? Today it does, but back in 2005, when the above forecast was issued, everyone took it as “Gospel Truth”. You could take it to the bank because the “execs” had spoken. Baloney.
None of these predictions have held up, unfortunately, and it’s about time we did our own homework and placed less reliance on those whose only interest is to salt their own oats.
For instance, yesterday’s L. A. Times sported the following headline: “Retailers report weakest March in 13 years”. Did any of our expert forecasters see this coming? None of them did. They’re singing a different tune now, however.
According to the Times story, “Analysts said they didn’t see the turn any time soon, which is worrying. Economists keep a sharp eye on consumers because their spending accounts for 70% of economic activity.”
At least they got something right … the fact that consumer spending is key to economic activity … but they drop the ball, as usual, by failing to connect consumer spending with unemployment. In the last 12 months, according to the 2008 Directory of California Manufacturers, 16,055 jobs and 564 manufacturing firms bit the dust, but California’s losses were “slight when compared to losses seen in other major industrial states over the past several years”, records indicate.
Citing the country’s economic downturn, a CEO of a Pennsylvania manufacturing firm indicted the politicians as well as supply line pundits, when he directly questioned the presidential candidates:
“When are you going to tell the American people about the country’s trade problems?” he asked. “When are you really going to do something about it?” [And he should have added, “How?”]