Headlines and data appearing in The Punch Line came from widely available publications including national and international newspapers, trade journals, economic and industrial bulletins and news websites.

Page 1: Dislocations Dominate – Recovery in Need of Rehab…

While most economic stats released recently continue to paint a mixed and uneven picture, that is better than the previous run of consistently sluggish data that so dominated over the summer. Nevertheless, there is a subtle reassessment underway whereby consumers and companies consider a downgraded outlook for the rest of the year and into 2011. Info from key sectors such as vehicle sales, construction outlays and personal income verify a two-track economy. The domestic economy is crippled; demand is growing weaker than any recovery in modern history. And any lift has been coming from growth overseas and the massive liquidity sloshing around. What’s worse is that the powerful forces of deleveraging and needed fiscal austerity will become serious drags on growth for an extended period. Europe and Japan were already slow growth stories – in developed markets; the US either breaks out on its own again or risks catching the low growth maladies. Partly offsetting the headwinds, financialconditions are slowly improving and many companies are coming to market to refinance their debt positions. But households have not seen this improvement, and most consumers and small businesses see little financial leeway. Also worrisome, there is a realization that the stimulus and tax cuts could be fading and might create a fiscal drag even before the taxes actually go up. Unquestionably, households need vigorous job opportunities and income growth, none of which is evident on the horizon yet.

From the section entitled: The New Geography of Business

New York Times Uncovered How China Delivers Red-Hot Growth Rates:

“New data from the World Bank show that the proportion of industrial production by companies controlled by the Chinese state edged up last year … investment by state-controlled companies
skyrocketed, driven by hundreds of billions of government spending and state bank lending.”

China’s population is aging rapidly, and the era of unlimited supply of rural labor may be
coming to an end…

Inland Move

Hon Hai plans to shift its work force from Shenzhen to Chengdu, Wuhan, and Zhengzhou, where costs are lower.

Shenzhen, China: China, the world’s largest contract manufacturer of electronics, facing rising wages for its huge Chinese workforce, is making a big investment in China’s hinterland in a bet that the country can retain its role as the world’s factory floor for decades.

From the section entitled: The Return to Normal!

The addition of more than 67,000 private-sector jobs in August and upward revisions to data for the previous two months ends a run of bad data that had fed fears that the U.S. economy could slip back into a recession.

But job creation is still not strong enough to match population growth or help the feeble economic recovery. That means that unemployment will remain high, adding for the political pain for the administration of President Barack Obama amid predictions that his Democratic party could lose control of Capitol Hill in November’s elections.

From the section entitled: Credit Matters

Federal deposit Insurance Corporation Finds 829 U.S. Banks at Risk

More than a tenth of U.S. banks remain at risk of failure even as some industry indicators, including credit quality, show signs of revival.

From the section entitled: Real Estate and Construction Outlook

U.S. Construction Spending Down 1.0% in July; May, June were Revised Down

Developers Are Giving Up On Properties

Like homeowners walking away from mortgaged houses hat plummeted in value, some of the largest commercial-property owners are defaulting on debts and surrendering buildings worth less than their loans.