Tuesday, November 3, 2009
U.S. Economy: Factories Expand More Than Forecast
Manufacturing in the U.S expanded faster than anticipated in October and exceeded every estimate of the 70 economists surveyed by Bloomberg. The news of the expansion eases concern that signs of recovery are strictly due to goverment stimulus. Our recovery is greatly linked to both the manufacturing and housing sector. The number of construction contracts unexpectedly rose again in September. First time home buyers are trying beat the November 30 deadline to qualify for the $8,000 tax credit. The economy still has many challenges ahead but gains in manufacturing and housing are a good sign.
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The improvement in manufacturing is definitely a good sign. However, I wonder if these results are merely a result of cutting costs by cutting jobs. If so, where will these workers go? I think it would be more beneficial for the government to consider ways to move these workers into new jobs in different sectors, instead of some other programs, since many firms have said they are unlikely to return to post-recession staffing levels in the near future, if ever.
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