Here's Why Manufacturing Matters

Harris Private Bank Report: Housing and Manufacturing Adding Momentum to U.S. Recovery

- Housing and manufacturing sectors showing signs of life

- Americans focusing on increasing household savings and paying down debt

- Foreign markets continue to face a number of fiscal challenges

- Growth in profits will pick up following lower energy and commodity input costs in third quarter

While the U.S. economy continues to face an uphill recovery, a variety of sectors are witnessing significant growth, according to the Fall Outlook for Financial Markets report by Harris Private Bank, a part of BMO Financial Group.

 The report revealed that in the second quarter of 2012, the U.S. economy slowed to an annualized 1.5 per cent growth rate – down from a 2.0 per cent pace in the previous quarter. However, there were some positive indicators:

 The housing sector continued to stabilize as a result of low interest rates and early recognition of troubled loans.

The manufacturing sector made gains through inventory building, rather than user demand, focusing on stock as current inventory levels are below historic norms.

Overall, incomes in the U.S. rose 0.5 per cent, pushing the nation's savings rate to 4.4 per cent as consumer spending stagnated.

"This trend we're seeing toward saving and debt reduction, while good on an individual level, can have a disastrous effect on the larger economy if everyone does it," said Jack Ablin, Chief Investment Officer, Harris Private Bank. "Consumption accounts for more than two-thirds of domestic economic activity and, as such, is a major driver to this economic recovery."

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Author's Note: I am also convinced that innovation is driving this recovery and not just the innovation of new products. Real innovation involves changing the consumer's purchasing habits. Of course that is linked back again to product innovation.

Thisi s happening both on a B2C and B2B level. Those stories are being posted at www.rodkackley.com and will be compiled in Manufacturing Renaissance, which will be published in September.  --Rod