Freedom Line Blog

People like Barack Obama, rationalizing his unsatisfactory economic stewardship, assured us that manufacturing was a thing of the past, and not coming back.  Well, a funny thing happened following his departure:

Barack Was Wrong

From our friends at American Enterprise Institute, predictions from people like Barack Obama on the U.S. manufacturing sector’s demise were greatly exaggerated.  As one can see from the image below, the sharp upward trajectory since Donald Trump’s election has taken American manufacturing output to a record high:

U.S. Manufacturing Reaches New High

And the good economic news just keeps on coming.   American manufacturing companies report a new record high positive outlook in the continuing wake of tax reform and deregulation.  Note the immediate uptick beginning at the very end of 2016:

Record Positivity Among U.S. Manufacturing Companies

From the National Association of Manufacturers (NAM):

[T]he latest jobs numbers confirm that the labor market has tightened significantly, with manufacturers increasing employment by a rather robust 18,876 per month on average since the end of 2016.  That is quite a turnaround from the sluggish job growth in 2016, and it is a sign that firms have continued to accelerate their hiring as the economic outlook has strengthened and demand and production have improved considerably.  Indeed, manufacturers have told us that challenges in recruiting new workers is their primary business concern right now.”

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Manufacturing Jobs Up, Unemployment Down

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NBC News reports a breath of fresh air for ailing U.S. manufacturing workers: Companies that once outsourced jobs to China are starting to bring some of them back.  Some of the reasons:

Labor costs are soaring by 40 percent a year, as migrant workers are becoming pickier, since there are more job opportunities at home. Also China’s one-child policy means there is no longer such a huge pool of young, dexterous workers. Bank lending is tightening and China’s currency is also appreciating by around 6 percent a year against the U.S. dollar, not quickly enough for US and European policymakers, but sufficient for factories on low margins to feel the pain.

Of course, slapping a new tax on USA-based job creators will stifle any trend towards manufacturing growth China’s growth might enable.

Mr. President, have pity on the working man…

This should be a period of robust cyclical recovery from the past recession, but we received yet another troubling sign from the Federal Reserve yesterday. For the month of June 2010, American manufacturers utilized only 71.4% of productive capacity, down from 71.7% utilization in June.

What this means is that instead of cranking up and increasing velocity, manufacturers decelerated from May to June.  Moreover, this 72% capacity utilization compares with the post-war historical average of 81%.  Translation:  there exists a lot of slack in our economy at a time when we should be expanding.  This news comes on the heels of reports that American companies are hoarding a record $2 trillion rather than spending it on expansion or job creation, and adds to the sense that Obamanomics are subduing our recovery, not stimulating it.