The article is interesting; its accompanying picture is too good to resist

Tighten That Belt Even More Because Here Comes the Dreaded S-Word

Stephen Green:

It's the economic conundrum that dare not speak its name — and it's looking more likely than the Goldilocks "soft landing" that Washington and the mainstream media keep promising. It's called stagflation, and anyone old enough to remember the Carter administration remembers it all too well.

While the super-glossy official version of the jobs situation remains rosy-ish — and I'll come back to that in a moment — the hard numbers that make up the economy's foundation are cracking like Nancy Pelosi left out in the sun without any sunscreen. "The US manufacturing sector is imploding, and the economic contraction is accelerating," ZeroHedge reported on Tuesday.

Calling it "dismal," ZeroHedge noted that the U.S. Manufacturing PMI report just came in at 47.9. Anything under 50 shows that manufacturing is shrinking, while over 50 indicates growth. That figure is under the "prelim print of 48.0 and below the 48.1 estimate." That's the fifth straight month of contraction.

Fine, whatever — recessions follow expansions just as surely as night is followed by later that night. I screwed up the metaphor on purpose because the economic growth we've enjoyed under the Biden-Harris administration has been mostly illusory.

To give you an idea of how all-in the mainstream press is on presenting Rosy Scenario's picture, take a look at this USA Today report from Paul Davidson, just out on Tuesday. The headline asks, "Is job growth just slowing from post-pandemic highs? Or headed for a crash?"

But guess what's missing from Davidson's analysis? Last week's yuge correction that BLS over the last year had invented 812,000 jobs that don't exist and, just as suddenly, winked them out of official existence. All of the job growth since Bidenomics took hold has been in government employment or in health care — which is virtually a government field now. Part-time work is way up and full-time employment has yet to recover to pre-lockdown levels.

Job growth is neither "just slowing" nor headed for a crash. It's imaginary. 

But let's get back to that manufacturing data because I buried the lead. All that contraction has been accompanied by increasing producer prices. In a sane economy, decreased demand goes hand in hand with suppliers cutting prices. But that's not happening this time around.

Inflation is when the government prints money faster than productivity increases and is usually accompanied by economic growth. Stagflation is when you get rising prices in a stagnant or even shrinking economy. That's where we are, or at least appears to be where we're shortly headed.

Related, and also by Stephen Green:

DECLINE IS A CHOICE: ‘A very serious situation’: Volkswagen could close plants in Germany for the first time in history.

Volkswagen is weighing whether to close factories in Germany for the first time in its 87-year history as it moves to deepen cost cuts amid rising competition from China’s electric vehicle makers.

In a statement Monday, the German automaker, one of the world’s biggest car companies, said that it could not rule out plant closures its home country. Other measures to “future-proof” the company include trying to terminate an employment protection agreement with labor unions, which has been in place since 1994.

“The European automotive industry is in a very demanding and serious situation,” said Volkswagen Group CEO Oliver Blume. “The economic environment became even tougher, and new competitors are entering the European market. Germany in particular as a manufacturing location is falling further behind in terms of competitiveness.

Previously: Germany is facing the problem of creeping deindustrialization.

Germany is facing the problem of creeping deindustrialization. This was warned by Gunnar Gröbler, CEO of the Salzgitter steel company, the Financial Times reports.

If producers of key products needed for industry, such as steel and chemicals, leave the region due to high energy prices, there is a risk of losing the entire value chain, he said.

These comments come after 32% of industrial companies surveyed told the German Chamber of Commerce and Industry (DIHK) in August 2023 that they preferred to invest abroad rather than expand domestically. The number is twice as high as in last year’s survey amid concerns about the future without cheap Russian gas.

Salzgitter’s remarks also come at a difficult time for German industry, when several major climate projects have been called into question due to the country’s budget crisis.

Just like the immigration crisis, Berlin knew exactly what would happen and plowed ahead.