U.S. Economic/Financial News
Accelerating Collapse of U.S. Real Economy
Jan. 6 (EIRNS)The accelerating pace of the economic collapse is expressed in developments of the day:
* Alcoa Inc., the world's largest aluminum maker, announced a third production cut in as many months, with 13,500 lay-offs, about 13% of its workforce, and an additional 1,700 contractor positions eliminated. The company's annual smelting capacity will be reduced by about 750,000 metric tons, or about 18%.
* Lyondell Chemical Co., one of the world's largest closely held chemical producers, filed for bankruptcy protection in New York. Based in Houston, Lyondell has assets of $27.1 billion, debt of more than $19.4 billion, and more than 25,000 creditors, according to a petition filed today in U.S. Bankruptcy Court in Manhattan. Seventy-nine of the company's affiliates also will file for court protection, including Basell Finance USA, Inc., according to the filing. The company's largest unsecured creditor is the Bank of New York Mellon Corp.
* Shipments from U.S. factories plunged a record 5.3% in November, the Commerce Department estimates. Orders for U.S. factory-made goods fell 4.6% in the month, more than twice as much as expected. Orders and shipments of nondurable goods dropped a record 7.4% in November, while orders for durable goods fell 1.5%, revised from the 1% drop reported two weeks ago.
Meanwhile, the Fed is trying to close the unprecedented spread between the near-zero Fed rate and rates demanded by banks for consumer and corporate loans, which rates have fallen only slightly. Fifteen-year mortgage rates are 5.06, 2.59 above the ten-year Treasury billthe spread was only 0.88 in 2003 when the Fed rate was at 1%.
Take It from Ford: Forget Selling Autos in 2009
Jan. 4 (EIRNS)Sales of all autos and light trucks in the United States will likely drop by 6-7 million over 2008-09, according to a forecast today by Ford Motor Company.
There is no possibility of keeping the auto machine-tool sector functioning with auto production, given a plunge of that magnitudeon the order of 40%.
Ford's chief analyst expects that overall U.S. auto sales for December will have fallen 35% from a year earlier; that 2008 auto sales will have fallen by 3 million from 2007 (from 16.1 million to about 13.1 million), a magnitude of fall which has not happened before; and, that the last four months' sales rates of 750-800,000/month will continue into 2009. That implies a drop of another 3 million or more from 2008 to 2009, to below 10 million units.
EIR estimates that tens of millions more square feet of vital machine-tool capacity tied to auto design, systems, and components will pass into bankruptcy and/or be scrapped, unless put to a different national economic mission. More than 30 million square feet of such capacity has closed since 2006.
Lyndon LaRouche proposed nearly four years ago that a Federal corporation be created to assume, employ, and expand this capacity in building the elements of a new national economic infrastructure such as high-speed railroad corridors, third- and fourth-generation nuclear power plants, desalination, water control and navigation, etc. There's no Ford in your future; but this, LaRouche emphasized on Dec. 28, is a 50-year, $1 trillion-a-year technology and machine-tool mission.
Machine-Tool Use and Manufacturing Jobs Evaporate
Jan. 4 (EIRNS)During October, the U.S. economy's consumption of U.S.-made machine tools plunged to $274 million, a decline of 32% from October of 2007, and a decline of 43% from September of 2008. Though public figures are not available, it is likely that the production of U.S. machine tools has fallen by a commensurate amount.
Since July 2008, the U.S. manufacturing sector has axed 737,000 jobs, and the construction sector has shed 680,000 jobs, a total of 1.4 million jobs, or nearly 10% of the remaining U.S. productive workforce, merely considering these two sectors.
Real U.S. Unemployment Is 21 Million
Jan. 9 (EIRNS)The number of officially unemployed Americans increased by 632,000 in December, to 11.1 million, completing a 2008 rise of 3.6 million in unemployment, according to the Bureau of Labor Statistics (BLS). But the real unemployed/underemployed part of the labor force is up to 21 millionincluding 1.9 million "discouraged workers," who have given up looking for jobs and are therefore "marginally attached" to the labor force; and 8 million who are forced to work part-time due to inability to find a full-time job. That 21 million is 13% of the entire workforce. And the number remaining unemployed longer than six months has doubled to 3.6 million.
U.S. employers have eliminated 1.9 million jobs, net, in just the past four months, including 524,000 more in December, the BLS reported. This is the fastest rate of employment collapse since the end of World War II. Some 150,000 more manufacturing jobs disappeared, making 800,000 lost in 2008; construction job losses were another 101,000. But retail, financial, transport, mining, and just about every other area of jobs except health care and education, were headed straight down.
The average U.S. weekly wage fell in December as well, by 0.35%.