Retail sales and industrial output both slowed in the US in August.
Shop sales grew 0.3% in August, below market expectations of a 0.5% rise and below July’s 0.5% increase, but excluding car sales, which are at their strongest in two years, retail spending actually declined 0.4% in August.
Industrial output rose 0.2%, the slowest pace in the past three months; output at U.S. factories fell 0.3% last month, the first decline in manufacturing after five straight increases.
Last month the economy also shed 4,000 jobs. The August figure from the Department of Labor came as a surprise, because economists had anticipated data showing an increase of 110,000 jobs. The last time the US economy shed jobs was four years ago in August 2003 when the total number employed fell by 42,000. The Department of Labor also cut its estimates for the number of new employees hired in June and July by a total of 81,000.
Meanwhile, figures from the University of Michigan showed that consumer confidence remains close to a yearly low.
A piece of more positive economic news: the US balance of payments deficit, which has been a factor in the weakness of the dollar, narrowed to $190.8 billion in the second quarter from $197.1 billion in the previous three months. However, this may be partly a consequence of a slowing economy and more expensive imports. The financial system is working.
We expect data to continue to be modest, but this is appropriate and will equalise the imbalances in the US economy, allowing a natural adjustment there and globally. Importantly, these changes must be underpinned by a changing culture, one which saves more and spends on infrastructure, health and education as much as convenience consumption.
Religion can be a useful guide to morality, but history has shown that it should be separate from politics. This is more so today than ever before because there is such diversity of belief and there is no majority view, even on a nominal basis, let alone a practising one.
The current US president has evangelised his own beliefs throughout the administration, even requiring official schedules to include prayer meetings. While spiritual engagement should be applauded, and is grossly neglected by most of us, it has been inappropriate to evangelise in a position supposed to represent ALL the people of a nation.
It seems that this will subside with the next administration. Of the front runners in the Republican party, none are expected to take their own religion on the campaign trail to the extent that Bush did. This will be good for America.
While we have come around to the notion that peace is an appropriate minimum standard of behaviour for developed countries it has never been an easy argument to make in our world today. The difficulty of fighting minds with armaments
George Friedman, eminent strategic analyst, offers a sobering perspective on the fall-out from the American “war on terror”, without having to reveal the awkwardness of embarking upon a virtual objective: to achieve a military victory in a psychological war. The challenge was made more difficult by the complexity and scale of the military objective: to conquer a nation in an unfamiliar part of the world and dictate a completely different social infrastructure and culture. The consequence has been a failure of the military objective, compounded by the terrorising of America by continually bombarding people through media with belligerent language and images of fear, as well as an extraordinary regression of civil liberties.
See Friedman’s piece War, Psychology and Time here. He notes as he sums up:
The effect on the United States is much more profound. The war, both in Iraq and against al Qaeda, has worn the United States down over time. The psychology of fear has been replaced by a psychology of cynicism. The psychology of confidence in war has been replaced by a psychology of helplessness. Exhaustion pervades all.