Obamanomics may impact manufacturers three ways

Rockford, IL– Three themes could dominate how “Obamanomics” will impact U.S. manufacturers in the months ahead, according to Chris Kuehl, economic analyst for theFabricators & Manufacturers Association Intl (FMA),in the new FMA economic update newsletter Fabrinomics. “Although President-elect Obama has had just a couple of weeks to start defining his approach, there are a few clues that bear monitoring,” said Kuehl regarding economics in the next administration. “In general, these are in the areas of trade, reactions to the recession, and future regulations.”
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3 ways Obama economics may impact manufacturers

FMA says… 1. Trade policies seem to reflect the Democratic Party’s agenda more than Obama’s, but he has yet to suggest that he will take a different position. 2. Reaction to the current recession: Initial thoughts 3. More regulation will be part of the system.

FMA’s Kuehl goes on to say, “Trade policies seem to reflect the Democratic Party’s agenda more than Obama’s, but he has yet to suggest that he will take a different position,” Kuehl said. “The notion is that trade is not necessarily a good thing and that the United States has a right to engage in protectionism. This position has provoked some real concerns from trading partners in Europe and Asia and some criticism from the likes of the WTO, IMF and various trade groups.
Obama indicated he would look at all the current trade agreements and evaluate them, a statement that creates consternation among supporters of NAFTA and CAFTA, as well as those who seek better relations with Europe in general. The impact on manufacturing will depend largely on where a given company stands. Those getting hammered by overseas competition may see some policies enacted that protect them, but those that have started to discover the joys of export are likely to see some of those markets slam closed.”
Another area to watch is reaction to the current recession. Initial thoughts from the economic team are heavier on fiscal solutions than monetary ones. “In all fairness, the monetary approach has been pretty fully exploited at this juncture, and there isn’t much left for the Fed to do,” said Kuehl. “The IMF has been urging countries all over the world to engage in fiscal stimulus and many have reacted. China just dumped close to $600 billion into their own stimulus package and the United States is now considering what else can be done to bail out the auto industry.”
Kuehl sees the Obama response to the economy as leaning heavily on government spending programs despite an impact on the federal deficit and the U.S. debt position globally, with Democrats seeking to keep some of their campaign priorities on the table, but that may prove harder to do. He added that if there is a major government push on recession, it may be an infrastructure development effort, a possible benefit to manufacturers serving that sector.
Kuehl’s third theme is the Obama push to “fix” the system once recession is past and he said more regulation will be part of the system. “The Fed is already more engaged in the U.S. banking system than ever before, and that involvement will likely expand. The Treasury Department is already a part owner of most of the major banks in the country, a leading insurance company, and perhaps, in time, the Big Three auto companies. That gives the U.S. government a major stake in the performance of its largest companies, which will mean direction and advice.”
Kuehl said the mood is waffling between micro-managing the economy, and establishing more transparency but leaving the markets to control themselves. The Obama economic team has elements of both positions, but dominant players appear to be more free-market. The control-oriented approach will slow recovery of banks and money markets, and will make access to credit challenging in the future.
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–Control EngineeringNews Desk
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