One Wonderful Fact
Are we talking ourselves into a recession? Is that even possible? Of course it is. We’ve talked ourselves into bubbles, too, like the last one called the dot-com market.
What was that famous line from P.T. Barnum: there’s one born every minute? Seems there are several thousand born every second. I hope you weren’t part of the dot-com frenzy, and I hope you aren’t part of the irrational lack of exuberance chorus singing now in the national media.
Yes, we can talk ourselves into all kinds of states whenever reason goes out the window with history. So what are the economic facts and precedence for this economy today?
Well, besides some major losses (following some spectacular gains) in the dot-com world, stock prices are holding up pretty well. Compared to 1987, this market is a bull and a half.
Secondly, the inflation picture is about as good as it gets around these parts. It’s essentially zero.
Thirdly, the liquidity picture remains very good. Simply put, if you have a good business idea, chances are extremely high you can find a bank that will back you.
And, probably most importantly, productivity in American manufacturing has reached gloriously embarrassing levels and continues to rise. Savvy money (and obviously all of it isn’t) can’t ignore you.
This economy is driven by one wonderful fact that is in turn surrounded by good luck. Here’s what I mean.
Stocks in companies will go up and down forever. Politicians will come and go. Fads will capture the young and irritate the old, and sometimes vice versa. Bubbles, like the dot-coms here or real estate in Tokyo, will rise up and burst. One fact though will always be worth the banker’s time and the investors’ and top management’s time and attention. It’s called creativity, and when it shows up in industry — as an engineering invention — it makes the whole world a better place.
Productivity is soaring on the American plant floor. Meanwhile, we are living in one of the most pro-business periods in our history where more and more people are invested in stocks in real, producing companies. We are once again the envy of the world.
Our factory world is in the middle of another dazzling display of productivity increases. This was evident at last month’s Manufacturing Week Show at Chicago’s McCormick Place. Creative engineering is giving us all a major boost in our standard of living and should keep the pessimists subdued.
Now that’s not to say that manufacturing isn’t having some problems. In fact, none other than National Association of Manufacturers chief Jerry Jasinowski noted at the show that manufacturing was in a "recession" now. His advice to Washington: cut the regulatory burden and focus on energy costs and supplies. Good advice, but there’s more.
The key word for modern times is invention, and we Americans have been setting records with it for generations. There’s no evidence that we have lost that inventiveness — in all areas of the economy but especially when it comes to production.
In fact, manufacturing productivity grew in the year 2000 alone by 7 percent! This year’s number may be around half of that, but consider then a 10 percent boost in output in about a year. That’s phenomenal! This looks to me like the start of the Second American Century, and keep in mind — that’s no bubble!
George Weimer
contributing editor
