Many believe the U.S. cannot compete with China on a manufacturing basis. While the U.S. is unlikely to employ as many manufacturing workers as it did in the 1970s, it is much stronger — and competitive — than most assume.
This time on FS Insider we spoke with Lauren Saidel-Baker at ITR Economics to discuss their outlook on the U.S. economy and on the factors making America’s manufacturing great again.
Slower Growth, But No Real Recession
ITR’s leading indicator signals that while the U.S. economy is currently doing well, there is potential trouble on the horizon. Saidel-Baker said the U.S. is in an accelerating growth trend right now, but that can’t last forever.
The ITR leading indicator shows that as we move into the 2019 economy, manufacturing will pull back, though only mildly.
“This is not a recession or any severe downturn,” she said. “Really, it’s just a slower rate of growth going forward next year.”
“Honestly, I’m hesitant to even use the ‘R-word,’ recession, because when I do everyone jumps back to that 2008 mindset. The industrial economy might contract, most likely later in 2019 or into 2020, but this will be the mildest recession we’ve had in at least the past 50 years.”
U.S. Manufacturing: Stronger Than You Think!
We often hear from economists that U.S. manufacturing is dead, but this couldn’t be further from the truth. In the U.S., manufacturing production has more than doubled since its peak in the 1970s.
In fact, our manufacturing production index is close to all-time-high levels, Saidel-Baker asserted. Going forward, she expects more growth, and that manufacturing will support U.S. industry.
The decrease in manufacturing employment is what sticks most in people’s minds, Saidel-Baker stated, but it’s important to distinguish between the number of people required for manufacturing jobs and the actual output of the manufacturing sector, which has more than doubled its production in the past 50 years.
