WCA November 2009

Statue of Liberty Image from BigStockPhoto.com Photographer: Marty

Commerce Department reported that wholesale inventories have had the longest series of declines since record-keeping began in 1987. Depletion of inventories is a reliable sign of economic revival. For another bellwether, on 9 th September the Federal Reserve said that 11 of its 12 regional banks reported signs of a stable or improving economy in July and August. Five districts, including San Francisco, home to the biggest regional economy, “mentioned signs of improvement,” the Fed said in its Beige Book business survey. (This report, published eight times a year, aims to give a broad overview of the economy as construed from banking data from all regions, bringing many variables and indicators into the mix.) To return to the Reuters/University of Michigan survey ❖ ❖ of consumer sentiment, it found that, although nearly three in four respondents thought the economy was still in recession, more than four in ten expected the economy to improve in the year ahead. While this is the highest proportion in five years, there is still pessimism about. Writing on forbes.com (11 th September), Reuters correspondent Tessa Moran summarised: “It seems that, while consumers are seeing light at the end of the tunnel, they are expecting the same sluggish economic recovery that economists and leaders in Washington have projected.” For its huge solar energy project in the Mongolian Desert, China chooses a builder from the American Southwest Chinese government officials on 8 th September signed a memorandum of understanding with First Solar Inc, a solar developer based in Tempe, Arizona, for a 2,000-megawatt photovoltaic power plant to be built in Inner Mongolia. The project, which is part of an 11,950mW renewable-energy park planned for Ordos City, is the biggest such undertaking to be announced to date. On completion, in 2019, the field of black panels will cover 25 square miles. Reporter Ryan Randazzo of the Arizona Republic did not conceal his pride in the selection of a local manufacturer for the prestigious commission. He wrote, “The plan represents not only a milestone for alternative energy but also a validation of the company’s efficiency and low production costs. First Solar faces at least five major solar-panel manufacturing competitors in China.” (“First Solar Signs Deal to Build Plant In China,” 9 th September) Major solar-power plants using black panels such as First Solar’s may be found in Spain, Portugal and Germany, and range in capacity from 40mW to 60mW in direct sunlight. The Republic supplied some details of the plant to be built in Mongolia. It will have a higher capacity to generate electricity than any single nuclear reactor or coal-burning power unit; although, unlike those plants, it will not operate around the clock. Solar panels cannot make electricity after dark. In direct sunlight, in Arizona, the plant would be able to power 500,000 homes at once. Energy

The US economy

In a sphere in which a little bravura goes a long way, the confidence of the American consumer is seeping back One of the more accurate criteria of the economic health of a nation is consumer sentiment. Perceptions of their financial situation influence whether people buy a house or a car now, or wait until things look a little brighter; and the decisions of millions of individuals ripple through the wider economy, to stimulating or dampening effect. September brought the good news that Americans are feeling a little better about the future. The Reuters/University of Michigan preliminary index of consumer sentiment increased to 70.2 from 65.7 in August. More encouraging still, these results exceeded the expectations of economists in a Bloomberg News survey, who had forecast a rise to only 67.5. And the index of consumer expectations for the six months through March 2010, which more closely projects the direction of consumer spending, increased to 69.2 from 65 in August. Inventories at US wholesalers have fallen as higher sales help distributors reduce excess supply. The pace of job losses has slowed, at least a little. These are signs that the country is pulling out of recession and Americans, taking heart, are returning to market for big-ticket items. “They are starting to grow more upbeat after suffering the biggest destruction of wealth on record from a slump in stocks and home prices,” wrote Bloomberg’s Courtney Schlisserman. “And companies are ramping up production to replenish stockpiles.” (“Consumer Sentiment Increases More Than Forecast,” 11 th September) To be sure, she noted, consumers may still be wary of upping the spending that makes up 70% of the economy as they focus on building savings and paying down debt. And Bloomberg respondent Jonathan Basile, an economist with Credit Suisse Holdings USA Inc, in New York, also had reservations. After declaring “Good news continues to come through, bad news continues to diminish,” he qualified his enthusiasm: “It’s better,” he said. “But it’s not good yet.” But the improved mood has some firm support. On ❖ ❖ 11 th September, President Barack Obama’s chief economist took note of a pick-up in investment in new equipment and in orders for long-lasting items, with its potential for helping boost US gross domestic product. “I’m very encouraged by what we’re seeing in those advanced durable goods orders,” Christina Romer, chairman of the White House’s Council of Economic Advisers, said in a TV interview. “Eventually, firms are going to say we need workers to produce these things.” While unemployment in that week was at a 26-year high of 9.7%, there was some joy even there. The Labor Department reported that the number of Americans filing first-time claims for jobless benefits had dropped in the previous week to the lowest level since July. And the

24

Wire & Cable ASIA – November/December 2009