Manufacturing activity in the U.S. in November shrank to its lowest level since July 2009, according to a report by the Institute of Supply Management (ISM) released today. This does not bode well for job creation in the manufacturing sector and is bad news in an economy where nearly 15 million people are struggling with unemployment and under-employment.
While Hurricane Sandy contributed to the slowdown, uncertainty over the “fiscal cliff” may be the biggest culprit. This should not be a surprise because economists and business leaders have been warning Washington lawmakers that even going close to the edge of the cliff is bad for the economy.
Scott Davis, CEO of UPS, which employs 325,000 Americans, told ABC News in November that he’s hearing directly from the nine million customers they serve – most small businesses – that they are “not investing in their businesses or hiring” because of the looming fiscal cliff. ”The needs of the country have to be put ahead of personal or party politics … The country is on an unsustainable fiscal path and the longer we wait, the more difficult our economic problems are to solve,” he said.
Meanwhile, economist Diane Swonk estimates that at least 200,000 fewer jobs have been created in the second half of this year because of fiscal cliff uncertainty.
The Congressional Budget Office has issued it warning, estimating earlier this year that 0.5 percent of economic growth will not happen because of uncertainty over fiscal cliff. Slow growth means fewer jobs. In issuing this estimate the CBO said that “quantifying anticipatory effects is difficult” – the impact of the uncertainty could end up being worse, we will know for sure in hindsight.
So while the lame-duck Congress and newly re-elected president argue, millions of unemployed Americans’ suffering worsens.