Tuesday

Factory production up at car plants - what do they know that we don't?

North American car manufacturers (US, Canada and Mexico) increased their overall production of new cars and trucks by 9% in the last month to a high of just unde 1.2 million new vehicles, according to numbers just out from Automotive News magazine.

Do you think they see a better economy coming? Probably.

Motor vehicle manufacturers are not stupid. They watch the economy carefully and don't build what they can't sell and don't build when they can't sell it. A lousy economy means fewer buyers on car dealer lots and that means more old inventory sitting around - and manufacturers cut back when that happens. So what's up?

Granted the latest employment report (literally out just hours ago) showed an uptick in employment numbers that was higher than industry experts and doom-sayer pundits thought would happen - and that's good news. In spite of the President's call for the do-nothing Congress to pass his jobs bill - which would itself create thousands of new jobs and boost the economy because of it, conservatives and tea partiers in Washington are refusing to go along with the program, although they have no program of their own.

With employment numbers up, maybe the economy really is getting better.

When we look at inflation numbers reported by InflationData.com for the first 8 months of this year and compare them with the same 8 months from five years ago in 2006, the rate of inflation in every single month is LOWER now than it was then. Granted, the conservatives and tea partiers don't like the current President, but when they were in charge, back in 2006, inflation was a lot worse than it is now.

With inflation numbers actually down, maybe the economy really is getting better.

Looking at household income, there's no doubt that the average person's household income has dropped in the last year, so who are they building all those new cars and trucks for? Well, one answer comes from looking at the sector of the economy that is actually making more money than ever before.


Their profits are back up again
 While the average Joe has seen his paycheck get smaller, there is one segment of the economy that is back to its pre-recession boom times - in fact, their numbers are higher in the last year than they were before the financial meltdown that continues to worry the average Joe.

The rich investment bankers, it seems, are getting richer.

It's reports like that which are causing the sit-in protests that are spreading - but that doesn't explain the upsurge in new cars and trucks being built. All those rich people can't buy all the new cars being built.

The only logical answer is that the vehicle manufacturers have decided that the economy is doing better than the nay-sayers are saying.

Why else would BMW increase its production in one month by 82%? or GM by 20%? or Hyundai-Kia by 48%? or Nissan by 22%? Even Mexico's car plants are building 22% more cars than they did the month before.

Maybe, just maybe, the doom and gloom that the talking heads spew is not so accurate after all. So why is there so much negative talk about the economy making news? There's no doubt that the economy is coming back but the big headline seems to be that it isn't happening as fast as people want. That makes sense when you step back and realize that we have become a "I want it now" society in so many ways.

It takes time for the economy to come back, sure, but there is no way that all the car manufacturers are building and shipping out cars and trucks that they think are going to sit around on dealer lots and gather dust. Detroit (and Canada and Mexico) all seem to think that something very good is coming down the road and it's going to get here sooner than the talking heads on the boob tube are saying.

Maybe that's why our parents called tv the boob tube in the first place. It's a shame more people in this generation don't remember that.

Burdge Law Office
When you get tired of looking down, it's time to look up