US manufacturing activity contracted in August, according to the latest data.
The Institute for Supply Management (ISM) PMI index for August came in at 49.1. Any number under 50 signals a drop in manufacturing. This was the first contraction in three years and the first time the index has dropped below 50 since August 2016. August marked the fifth straight monthly decline.
Meanwhile, IHS Markit PMI hit 50.3, the lowest number since September 2009 – in the aftermath of 2008 crash.
We got more signs that the economy is slowing down this week. And yet pundits and policymakers keep insisting everything is great.
In his latest podcast, Peter Schiff says he thinks people like Donald Trump and Larry Kudlow know deep down that things aren’t that great, but they want to keep kicking the can down the road for political reasons.
In a podcast earlier this month, Peter Schiff talked about the “twin deficits” of national debt and trade. We’ve talked a lot about the federal debt spiral, and there has even been some discussion about it in the mainstream. But almost nobody is paying attention to the growing trade deficit. Peter is an exception. When the August numbers came out earlier this month, Peter noted it was the largest trade deficit in merchandise since the summer of 2008. And what happened right after the summer of 2008? The collapse of 2008.
The reason the trade deficit got that big is before the collapse, we had a bubble. We had a consumer debt binge where all the cheap money that was being created was feeding imports because Americans were taking their incomes, or their cheap money, and buying imported products. And so the big trade deficit was evidence of the bubble. And of course, the big trade deficits in and of themselves are unstainable.”
Antonius Aquinas has also taken note of the trade deficit. In the following article, he points out that tariffs aren’t going to make America Great Again. We need savings and investment, not a trade war.