A Manufacturing Slump that Never Ended
Thursday, May 15, 2014
|Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).|
A monthly April real production drop just reported by the Federal Reserve and annual revisions issued in late March showed dramatically that U.S. manufacturing’s recession continues, with real output now back below the pre-recession peak hit in December, 2007.
These net losses expose the manufacturing renaissance claims propagated by President Obama and other cheerleaders as a damaging hoax which keeps masking the urgent need for policy overhaul on the international trade and other fronts. In addition, they reveal the folly of the President’s determination to double down on trade policy failure by seeking a Trans-Pacific Partnership pact with protectionist Asian traders, along with the sweeping fast track negotiating authority that would grease the skids for its Congressional approval.
The imperative of revamping trade policy was also underscored by the Federal Reserve’s latest steel output figures, which are now down on net for more than three years due largely to the massive dumping
of subsidized foreign steel into the wide open U.S. market.
According to the latest industrial production survey, inflation-adjusted U.S. manufacturing production’s growth fell by 0.34 percent in April. This decline, coupled with the new annual revisions, leave domestic industry’s output 0.78 percent below levels achieved at the onset of the last recession (December, 2007), more than six years ago.
Real iron and steel production, pressured by subsidized and dumped imports, fell by 2.99 percent on month in April. Partly as a result, the sector’s inflation-adjusted output is now down on net since March, 2011, and is in fact 0.21 percent lower than that more-than-three-year old figure.
The new Fed figures also revised March’s output growth upward from 0.54 percent to 0.73 percent, and February’s gains from 1.40 percent to 1.50 percent.
The year-on-year April inflation-adjusted manufacturing gain of 3.09 percent was healthy as well –and surpassed not only the overall economy’s feeble growth, but manufacturing’s 2.44 percent expansion between April, 2012 and April, 2013. But the April yearly gain fell short of March’s 3.22 percent. Along with the new monthly drop recorded well after the end of the harsh winter, the new year-on-year numbers raise big questions about the sector’s vigor going forward.
Manufacturing’s April monthly production losses were broad-based, with real durable goods output sinking by 0.32 percent, and nondurables output falling by 0.35 percent. The durable goods and overall manufacturing performances were held down by a 0.47 percent monthly decline in auto and light trucks – the second straight such decrease in this previously torrid industry. A 1.59 percent after-inflation monthly output decline in the broad machinery sector weighed on manufacturing’s results, too.
Year-on-year, real durable goods output is up 4.33 percent in April – lower than March’s 4.55 percent, which in turn was revised up from 4.13 percent in March. April’s yearly gains were larger than the 3.78 percent gains achieved between 2012 and 2013, but March’s figure was down from the 5.02 percent real expansion achieved the year before.
Real durable goods production is now 5.48 percent higher its level at the last recession’s onset.
Nondurable goods production’s 0.35 percent inflation-adjusted monthly shrinkage in April compares with a 0.69 percent gain in March (revised up from 0.65 percent), and a 0.99 percent expansion in February (revised up from 0.92 percent).
Year-on-year production for nondurable goods advanced April 1.71 percent in April – slightly faster than the comparable new 1.69 percent gain for March (itself adjusted up from 1.64 percent). April’s yearly nondurables production increase was much faster than the 2012-13 rate of 0.96 percent. But March’s 2013-14 figures trailed the 1.82 percent growth recorded for 2012-13.
Real nondurable goods output is now 8.21 percent below its pre-recession peak – hit in July, 2
Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).