On Wednesday, The Washington Free Beacon reported the following:
U.S. business activity contracted for a fifth straight month in November, with a measure of new orders dropping to its lowest level in 2-1/2 years as higher interest rates slowed demand.
S&P Global said on Wednesday its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to 46.3 this month from a final reading of 48.2 in October. A reading below 50 indicates contraction in the private sector. Activity is slumping under the weight of the Federal Reserve’s most aggressive interest rate-hiking cycle since the 1980s aimed at curbing inflation by dampening economic demand.
The flash composite new orders index dropped to 46.4, the lowest level since May 2020, from a final reading of 49.2 in October. Outside the initial wave of the COVID-19 pandemic, this was the worst reading since 2009.
The article concludes:
Average input prices increased at the softest rate in two years, but factories still faced challenges finding skilled labor. This suggests the slowdown in inflation will be gradual as wages remain sticky.
The survey’s flash services sector PMI decreased to 46.1 from 47.8 in October. Services businesses also reported weak demand and a moderation in input prices.
I am not an economist, and I do not totally understand what these numbers mean. Generally speaking, inflation is a problem and the rising interest rates that are supposed to combat it are a problem. It is my understanding that the solution to the inflation problem could be found in bringing back domestic energy production and limiting government spending. The new House of Representatives that will be sworn in in January does have the power to cut government spending; however, it is doubtful that they have the power to overrule the Biden administration’s restrictions on domestic energy production. All of us need to be concerned for the people in the colder regions of America this winter. Heating costs will be very high, and many people are going to suffer because of brownouts and energy costs. All of this is the result of the Biden administration’s energy policies. The war in Ukraine is a contributing factor, but not the main cause. Energy prices began to rise in January 2021 and have continued to rise since (with a few pauses). Energy is an international commodity and is subject to supply and demand. The way to bring energy costs down in America is to get back to producing our own energy. That is also the way to curb inflation.