Yesterday, during a House Energy and Commerce Subcommittee hearing, former Sens. J. Bennett Johnston (D-LA) and Byron Dorgan (D-ND) stated their case for allowing the United States to export its vast energy reserves.  The Department of Energy is currently reviewing applications to export natural gas, and we expect a decision on at least some of the applications soon.  At the same time, the Army Corps is in various stages of permitting for expanded coal export capacity in the Pacific Northwest.  Both sets of export projects have received significant attention and scrutiny in Washington, D.C.

Sen. Dorgan spoke on behalf of the Bipartisan Policy Center (BPC), a nonprofit that boasts both Republican and Democratic members of Congress among its staff, as well as leaders from industry and environmental groups on its board of directors.

According to Sen. Dorgan, the BPC’s Energy Board reviewed the recent studies on the impacts of LNG exports and “concluded that domestic gas prices are more likely to drive export levels than exports are likely to determine domestic prices . . . that LNG exports are likely to have at most a modest impact on domestic natural gas prices—LNG exports will adjust as U.S. prices rise or fall.”  Dorgan went considerably broader than just natural gas, though.  He stressed: “restricting international trade in fossil fuels is not an effective policy to reduce global greenhouse gas emissions or to advance domestic economic interests, and we recommend against any such restrictions.”

That is precisely where the NAM stands on energy exports. Manufacturers fundamentally believe in free trade and open markets—a policy that extends to energy exports. We oppose bans or similar market-distorting barriers to our energy exports. We are pleased to see the BPC take the same stance.

Sen. Johnston, a Louisiana Democrat who spent 25 years in the U.S. Senate, put it eloquently:

“The free market might not always lead to everyone’s definition of the sweet spot, but experience has shown that it is a better allocator and regulator than bureaucrats and politicians. We should heed the admonition of Adam Smith that demand begets supply: Allow the free market to allocate the nation’s newfound energy bounty.”

Manufacturers believe in a true “all-of-the-above” energy strategy that embraces all forms of domestic energy production, including oil, gas, coal, nuclear, energy efficiency, alternative fuels and renewable energy sources. We are a country built on exports—the National Association of Manufacturers was founded because our members wanted to export—and we must continue to let the principles of free trade and open markets govern in the area of energy exports.

Ross Eisenberg is vice president of energy and resources policy, National Association of Manufacturers.

The Federal Reserve Board said that U.S. consumer credit rose by $8.0 billion, or 3.4 percent, in March. This was slower than anticipated, with the consensus estimate expected to show a $15.0 billion increase. Total debt outstanding was $2.8075 trillion, with $846.2 billion in revolving credit and $1.9613 trillion in nonrevolving loans outstanding.

The other big headline in this data was the decline in revolving loans for the month, which includes credit cards and other lines of credit. The value of revolving credit decreased by 2.4 percent for the month, and in the first quarter of 2013, it eked out just a 0.2 percent gain. In general, we have seen some deleveraging in revolving credit since the end of the recession, with these lines up just 0.2 percent and 0.4 percent in 2011 and 2012, respectively.

Regarding the decline in the March data, this is consistent with analysis showing an easing of both personal income and personal spending. This suggests that the pullback in purchases also meant a decline in credit card borrowing for the month.

Meanwhile, nonrevolving lines of credit increased 5.9 percent in March, or 8.1 percent in the first three months of the year. This category, which includes auto and student loans, has seen tremendous growth over the past couple years. These loans have helped to finance greater motor vehicle sales – one of the larger drivers of economic growth of late. But, growth in student lending, which is administered now by the federal government, has been tremendous, up 23.9 year-over-year. When you exclude the federal government from the analysis, nonrevolving loans were 3.3 percent higher than they were one year ago.

This suggests that consumer debt is consumer indebtedness has moved only modestly over the past 12 months. While overall credit outstanding is 5.7 percent year-over-year, the bulk of that growth was in auto and student loans, particularly the latter.

Chad Moutray is chief economist, National Association of Manufacturers.

Today the Senate will take up the bipartisan Water Resources Development Act of 2013, S. 601, also known as WRDA. This legislation is critical to the competitiveness of manufacturers throughout the United States and will ensure investment in our 12,000 miles of inland and coastal waterways.  Our nation’s navigable rivers help keep transportation costs competitive and are vital for manufacturers’ supply chains to move products and commodities such as coal, petroleum, chemicals, steel, fertilizer and grain among others valued at approximately $78 billion.

Manufacturers strongly support the measures included in S. 601 to streamline environmental reviews that build off the success of coordinated reviews for federal highway and transit projects. It’s a proven process that works, saving time and money. The Federal Highway Administration recently found that environmental streamlining has cut the time to permit a highway project in half, from 73 months down to 37 months. Reducing red tape to deliver Army Corps-sponsored infrastructure projects is important progress.

We are also hopeful that S. 601 will be enhanced in the days ahead to make the nation’s vast inland waterway system more efficient and competitive. The framework provided by the Reinvesting in Vital Economic Rivers and Waterways (RIVER) Act of 2013, S.407 should be included in the final version of S. 601. A comprehensive capital development plan is necessary to achieve the full potential of a robust inland waterway system.

Too often, funds derived from Harbor Maintenance fees are diverted elsewhere instead of going into our ports and harbors for regular upkeep. The WRDA bill will ensure that the fees collected are fully used for intended harbor maintenance projects. More than 90 percent of the nation’s top 50 ports require dredging and by neglecting ports and harbors we are putting our nation’s manufacturers and industries at a competitive disadvantage.

The Senate’s anticipated swift action this week should signal to the House the importance of soon moving on its version of WRDA legislation.

Manufacturers rely on our nation’s inland waterways and ports to support jobs and grow. Our nation will fall even further behind if we do not make the necessary investments in critical transportation infrastructure.

Robyn Boerstling is director of transportation and Infrastructure Policy, National Association of Manufacturers.

As the Senate prepares to take up the Water Resources Development Act (WRDA) of 2013 (S. 601) next week, manufacturers are preparing to articulate the importance of this critical legislation to the nation’s competitiveness and ensuring the country has a modern transportation infrastructure that is poised to meet the demands of increased trade and a growing economy. The nation’s inland waterways are a quiet mode of transportation but it is now time to turn the spotlight on to the value of this vast 12,000-mile system to manufacturing and other industries critical to the economy. The inland waterways help keep transportation costs competitive and move products and commodities valued at $78 billion.

To gear up for the anticipated Senate action on S. 601, manufacturers heard from a panel of experts at the National Association of Manufacturers (NAM) headquarters in Washington, DC.  More than half of the locks on waterways are more than 50 years old, and others date back to the turn of the last century, said Mike Toohey, president and CEO of the Waterways Council, Inc. “We’re not keeping pace,” Toohey added.

Our rivers, ports and harbors in the United States are unique natural resources that have tremendously benefitted our commercial success as an industrial nation. Maintaining these systems is a federal responsibility that is rooted in the Constitution and the founding of our nation. Awareness of the Harbor Maintenance Trust Fund and the fact that Congress has not kept pace with investments needed to keep the nation’s ports and harbors properly dredged to their authorized depths has reached a new high, said Barry Holliday, chairman of the Realizing America’s Maritime Promise Coalition.

National Waterways Conference President Amy Larson said that lawmakers in both the House and Senate are aware of the importance of WRDA. Senate Environment and Public Works Committee Chairman Barbara Boxer (D-CA) and ranking member David Vitter (R-LA) are committed to bringing the bill to the floor, while House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) is also working to build support.

Several challenges remain unresolved at this point in time but manufacturers appreciate the bipartisan effort the Senate and Environment and Public Works Committee has undertaken to develop the legislation.  It is time to invest in the infrastructure our manufacturers depend on. This legislation is long overdue.

Robyn Boerstling is director of transportation and infrastructure policy, National Association of Manufacturers.

We have had some good news this week out of the auto sector. U.S. automakers announced an increase in sales for 29 percent from last April. This marks the industries best April since 2007.

Additionally, Ford announced the company will be adding nearly 900 workers at is Kansas City, MO factory to increase production of F-150 trucks. Ford is also renovating this facility to produce the Transit cargo van which will add 1,100 workers.  So in total the company will add more than 2,000 jobs which is great news for American workers and manufacturing.

When a company like Ford is able to expand production it is positive news for manufacturers all throughout the supply chain. We’ve seen several indicators in recent weeks that manufacturing growth is slowing, and today’s trade report showed that exports feel again in March. We need action from Washington on pro-growth policies to help create more positive stories of job creation similar to this from Ford and the auto industry.

The Society for Human Resource Management (SHRM) reported that the pace of hiring for manufacturers should increase slightly in May. The monthly Leading Indicators of National Employment (LINE) report from SHRM says that 52.3 percent of manufacturers plan to increase their hiring in May, up from 50.3 percent in April and 46.6 percent one year ago. With that said, there were also more manufacturers who plan to reduce their employment, 9.4 percent now versus 6.1 percent last year.

The net percentage of new hiring in the manufacturing sector has risen from 37.8 percent in April to 42.9 percent in May, suggesting a slight pickup in activity this month. That figure is also 2.4 percentage points higher than one year ago.

One factor which is challenging employment is the difficulty to attract qualified workers, something that continues to confront manufacturing businesses. In this survey, 15.1 percent of manufacturing respondents said that it was more difficult to recruit new employees, with 3.2 percent saying that it was less difficult. At the same time, 8.7 percent of manufacturers were increasing their compensation for new workers, essentially the same pace as last year.

The SHRM survey is one of the few that forecast employment one month ahead. In the meantime, the Bureau of Labor Statistics will report national employment data tomorrow. The consensus estimate is for an increase roughly 150,000 nonfarm payroll workers in April, with manufacturing employment growing very slowly.

Chad Moutray is chief economist, National Association of Manufacturers.

The Bureau of Labor Statistics reported that labor productivity in the first quarter for the manufacturing sector rose 3.8 percent, its fastest pace since this time last year. The primary driver of the increase in productivity was higher output, which jumped 5.6 percent for the quarter for manufacturers. At the same time, hours rose just 1.7 percent, allowing overall unit labor costs to fall by 0.5 percent. These findings suggest that there has been some progress for manufacturing in terms of output and productivity in the past two quarters, an improvement from the weaker output experienced in the middle of last year.

Moreover, these benefits flowed through to both durable and nondurable goods businesses. Labor productivity for durable goods manufacturers rose 3.7 percent on output gains of 6.5 percent for the quarter; whereas, nondurable goods firms had a labor productivity increase of 4.6 percent on 4.7 percent higher output. Unit labor costs declined 0.6 percent and 0.8 percent, respectively, helping to make these firms more competitive globally. This represents a nice turnaround from 2012, which saw unit labor costs rise for both sectors.

For the larger economy, the productivity changes were less dramatic. Labor productivity in the nonfarm business sector rose 0.7 percent in the first quarter, an improvement from the 1.7 percent decline experienced in the fourth quarter. The shift from negative to positive between the two quarters stemmed from better output data. Real GDP increased 2.5 percent for the quarter, as noted last week, which while below expectations was still healthier than the paltry growth at year’s end. Unit labor costs for the nonfarm economy rose 0.5 percent, slowing from the 4.4 percent growth rate experienced the prior quarter.

Chad Moutray is chief economist, National Association of Manufacturers.

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit fell from $43.63 billion in February to $38.83 billion in March. This is the second-lowest level since January 2010, almost equaling the trade deficit of $38.14 billion of December 2012.

This was a significant and unexpected narrowing in our trade position, resulting from a sharp drop in goods imports which exceeded the decline in goods exports. Goods exports decreased from $132.18 billion to $130.35 billion; whereas, goods imports went from $192.93 billion to $186.49 billion.

Unlike the changes seen in the past couple months, the narrowing in March was due mostly to non-petroleum factors. The petroleum trade balance eased marginally from $21.45 billion to $21.13 billion, with the non-petroleum trade balance dropping from $38.62 billion to $34.76 billion. With that said, petroleum exports and imports were lower, with cost mostly likely helping to reduce these values by almost equal amounts. The average price of West Texas intermediate crude in March was $92.94 per barrel, down from $95.31 a barrel in February.

There were declines across-the-board in goods exports categories. The largest decrease was in foods, feeds, and beverages, which were down $1.05 billion. This was followed by lower exports for the following major groups: motor vehicles and parts (down $331 million), non-automotive capital goods (down $269 million), consumer goods (down $260 million), and industrial supplies and materials (down $288 million). There were some exceptions, with the most notable being increases in exports for civilian aircraft (up $582 million) and pharmaceuticals (up $441 million).

Meanwhile, goods imports were also lower, as noted above. These declines were as follows: consumer goods (down $3.41 billion), non-automotive capital goods (down $1.51 billion), industrial supplies and materials (down $1.42 billion), and motor vehicles and parts (down $771 billion). This suggests that U.S. consumers have slowed their purchases of foreign goods, much as we have seen with the recent easing in the pace of retail sales data. (continue reading…)

The Federal Reserve kept its existing monetary policies in place at its latest Federal Open Market Committee (FOMC) meeting. This was largely expected. With the policy positions unchanged, the focus instead was on the language that the Fed used to describe economic conditions. In particular, the Fed said that the U.S. economy is “expanding at a moderate pace,” but it added that “fiscal policy is restraining economic growth.”

This latter point is a reference to higher payroll taxes, across-the-board federal budget cuts, and the continuing debate over how to resolve our nation’s fiscal challenges. Given the limitations of fiscal policy right now and lack of action from Congress and the Administration, the FOMC has felt that it needs to act to stimulate growth pursuant to its dual mandate of tackling both inflation and unemployment. With pricing pressures under control for the time being, the Fed is free to pursue highly accommodating policies.

Specifically, the Fed will continue to purchase $85 billion in mortgage-backed and long-term securities each month, helping to push down long-term interest rates. The Fed will continue to make these purchases until the unemployment rate reaches 6½ percent or until longer-term inflation consistently exceeds 2½ percent. In the event that either of these thresholds is reached, the FOMC would re-evaluate its current stance.

The minutes of the last FOMC meeting in March led many to believe that some voting members were open to scaling back these purchases if economic conditions improved in the coming months; however, it is widely expected that these purchases will continue at least until year’s end, if not longer. Note that the Fed’s most recent economic projections do not have the unemployment rate reaching 6.5 percent until the beginning of 2015.

As with previous statements, Esther L. George, the President of the Kansas City Federal Reserve Bank and a voting member of the FOMC this year, dissented. She remains “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.” Ms. George is one of the “inflation hawks” who continues to worry about the long-term impact of the Fed’s stimulative policies.

Chad Moutray is chief economist, National Association of Manufacturers.

Employers and consumers are set to face higher health costs due to the Affordable Care Act’s tax on health insurance plans, according a recent analysis by Milliman. Contrary to the stated goals of the law to reduce health care costs, the tax alone will cause premiums to increase by as much as 2.4 percent in 2014, reaching as high as 2.9% in later years. According to the study authors, the effective result is a tax on both consumers and employers.

Not only will the health insurance tax cause employers’ and consumers’ health care costs to rise, it will also stifle job creation. The National Federation of Independent Business projects that the increased cost of employer-sponsored health insurance from the will reduce private sector employment by as much as 249,000 jobs by 2021, and reduce real GDP by up to $36 billion. Small businesses are projected to incur nearly 59% of the job losses directly associated with the tax.

Manufacturers support efforts in Congress to repeal provisions of the Affordable Care Act, such as the health insurance tax, to help make health coverage more affordable. In this case, doing so would have the added benefit of preventing job losses in an already difficult economic environment.

Dorothy Coleman is vice president of tax and domestic economic policy, National Association of Manufacturers.