Good for manufacturing—Buyers give Bush thumbs-up
Tom Stundza -- Purchasing, 12/9/2004 2:00:00 AM
Buyers are more optimistic than economists that President Bush's second term will trigger a surge in domestic manufacturing. A post-election e-mail poll of 500 readers by PURCHASING magazine found that 50% of buyers were more optimistic about their economic future than they had been this past summer. That is more bullish than the 43% of 115 economists surveyed by the National Association of Business Economists, but more bearish than the 60% of 44,000 American adults polled by PollingPoint.com. It's also in sharp contrast to the pre-election mood in October when U.S. consumer sentiment was on the decline because of rising energy costs and persistent job worries.
While only 45% of the buyers surveyed reckoned that the manufacturing economy would start percolating again in the final quarter of 2004, 70% said that they now believe that the economic recovery would continue at least through 2006. This contrasts with pre-election surveys by business and political groups that reported declining assessments of business conditions and a deep concern for future prosperity because the slow-paced manufacturing recuperation has yet to bring production anywhere near pre-recession levels.
Most of the buyers surveyed (70%) weren't surprised the Republican incumbent was re-elected, and, indeed, saw him as the preferred candidate since 68% of them believe that their company is in better shape financially than it was when the president was elected to his first term in 2000.
Accordingly, they anticipate a continuation of current monetary policies, with only 35% of the buyers expecting the Federal Reserve Board to boost interest rates aggressively.
In his first press conference after being re-elected to a second term, the president did state that he thought that the American public wants him "to get this economy moving." But, he highlighted tax reform and Social Security reform as the two economic issues for a second term—and not a re-evaluation of the dollar or other changes in fiscal policy to stimulate jobs creation.
Johanna Schneider, external relations director of the Business Roundtable, a Washington lobby group, asserts that "President Bush's re-election provides dramatic new opportunities for business."
But how that plays out in reality for manufacturing is sketchy—because the president's campaign promises were to reduce litigation, increase and monitor trade, establish an energy policy, review ways to reduce health-care costs and increase training for workers displaced by outsourcing.
Indeed, the promises for manufacturing were nonexistent, probably because a pre-election poll by the Wall Street Journalfound that only 29% of the electorate viewed the economy as a priority.
"The costs of doing business in America are too high, the playing field for global trade must be leveled, and manufacturing [needs] a better trained workforce," says John Engler, president of the National Association of Manufacturers.
"Continuity in the White House and a more supportive Congress will now shift the legislative focus to making U.S. companies even more competitive on a global basis," asserts Engler. However, economists reckon that won't happen and suggest that, instead, government spending likely will be concentrated on defense and homeland security, with a question mark hanging over promises of an ambitious space program.
That point of view from economists meshes with the thinking of the populace. Fears of another terrorist attack outweighed pocketbook concerns for only 46% of the buyers polled—which fits into the Wall Street Journal survey which found that 62% of Americans want the war in Iraq ended and the war on terror resolved before the White House addresses such other issues as the economy, unemployment, health care or education reform.
Still, President Bush's re-election opens the possibility of returning the long-stalled U.S. Energy Policy Bill to Congress. That bill would put in place a plan to ease the nation's dependence on foreign oil and to upgrade its aging energy infrastructure, from refineries to pipelines to the power grid. That may assuage the worries of buyers, since 60% believe prices will continue rising over the next six month.
The Bush victory election also is shaping up as a potential bonanza for Wall Street, where firms are salivating about the possibility that he will follow through on his pledge to allow private investment of Social Security funds.
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