(What’s Left of) Our Economy: Latest Manufacturing Jobs Recession Marks Second Birthday


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American domestic manufacturing employment fell sequentially by another 4,000 in November, extending its jobs recession to two years. Industry’s employment is now down on net by 12,000 since November, 2014, as its worst jobs slump since the Great Recession continued. Largely as a result, manufacturing’s share of total U.S. non-farm employment sank to another record low – just short of 8.45 percent. Moreover, in a break with the recent trend, manufacturing’s current dollar wages took their biggest sequential fall (0.61 percent) since November, 2011 (0.71 percent).

Manufacturing’s November job loss represented the seventh sequential drop this year, and the sector’s year-on-year losses (54,000) were the greatest since August, 2010 (73,000). September and October monthly employment revisions were slightly positive (11,000 total).

Here’s my analysis of the latest monthly (November) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

>American domestic manufacturing’s monthly November jobs loss of 4,000 extended industry’s employment recession to two years – it’s worst stretch for payrolls since the Great Recession.

>Thanks to the sector’s seventh monthly net jobs decline this year, manufacturing’s employment is now down by 12,000 since November, 2014.

>Despite positive revisions (11,000) for September and October, the November employment decline pushed manufacturing’s share of total U.S. employment down to another record low – just under 8.45 percent.

>Contrary to a recent pattern, however, November’s manufacturing job loss was accompanied by a sharp drop in nominal wages. Hourly pay in the sector fell by 0.61 percent from October levels – the worst such decline since November, 2011’s 0.71 percent.

>Pre-inflation wages for the private sector as a whole decreased by only 0.12 percent on month in November.

>November’s losses also drove manufacturing’s year-on-year employment loss down to 54,000 – the largest such decline since August, 2010’s 73,000.

>Between November, 2014 and November, 2015, manufacturing gained 42,000 jobs.

>Part of manufacturing’s big monthly wages drop might have stemmed from the sharp upward revision in October’s monthly advance – from 0.38 percent to 0.61 percent. That was the best such performance since August, 2015’s 0.63 percent.

>Due to the November monthly wage decline, hourly current dollar manufacturing pay advanced by 2.66 percent year-on-year. That’s better than the 2.33 percent recorded between the previous Novembers, but the lowest yearly advance in 2016 since March’s 2.55 percent.

>Since its 2010 employment bottom, manufacturing has regained 807,000 (35.19 percent) of the 2.293 million jobs it lost during the recession and its aftermath. By contrast, the private sector overall lost 8.801 million jobs from the recession’s December, 2007 onset through its February, 2010 absolute employment low. Since then, it has increased net employment by 15.626 million.

>In fact, whereas total private sector employment is now 5.90 percent higher than at the recession’s beginning, manufacturing employment is still 10.81 percent lower.

>Despite strong relative recent performance, since the recovery’ June, 2009 onset, manufacturing’s pre-inflation wage gains still trail those of the private sector as a whole by 16.94 percent to 13.77 percent.

>Examining manufacturing’s inflation-adjusted wages reveals a more complicated picture than depicted by the pre-inflation wage numbers. The latest Labor Department figures are from October, and show that manufacturing’s month-on-month performance (real wages rose 0.28 percent) handily beat that of the private sector (up 0.09 percent).

>Year-on-year, manufacturing’s October real wage increase also easily topped that of the private sector – by 1.78 percent to 1.23 percent.

>Yet since the recovery began in mid-2009 – nearly seven years ago – inflation-adjusted manufacturing wages have risen only 1.59 percent. Real private sector wages have increased considerably faster – by 3.98 percent.

Making News: Video of Today’s CNBC Appearance on Trump’s Carrier Jobs Moves


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I’m pleased to announce that I appeared this afternoon on CNBC to discuss President-elect Trump’s initiative to prevent the Carrier division of United Technologies from moving manufacturing jobs and production to Mexico. Apologies for not posting this in time for folks to watch the segment live, but you can see the first half at this link, and the second here.

And keep visiting RealityChek for news of future media appearances and other developments.

(What’s Left of) Our Economy: Trump’s Globalization Promises are Already Producing Victories


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America’s political and media establishments keep warning of the disastrous consequences of President-elect Donald Trump’s vow to conduct international economic policy by in effect telling U.S. competitor countries and offshoring multinational companies to “Jump.” And rather than responding indignantly by promising to resist or retaliate and touch off a series of international trade wars and other conflicts, businesses in these countries keep responding by in effect asking “How high?”

As a result, they keep adding to the already copious body of evidence indicating that the United States boasts more than enough leverage (thanks to the matchless power of its market) to achieve better terms of trade unilaterally. Here are two of the latest examples.

Yesterday, the reliable Taiwanese technology publication Digitimes reported that “US-based high-tech enterprises are expected to reduce their reliance on data centers abroad and add ones in the US.” In addition, the Digitimes piece quoted a Taiwanese tech magnate speculating – reasonably – that tech companies (like his) that have already built significant manufacturing capacity in the United States will have advantages over more foreign-centric competitors – who will “have to evaluate the feasibility of shifting factories from Mexico or other areas to the US….”

Meanwhile, on Sunday, Reuters quoted the COO of the Indian tech services giant Infosys as stating that because they expect Mr. Trump to curb significantly the visa programs that enable American tech companies to replace U.S. workers with low-paid imported Indian counterparts, companies such as his will “speed up acquisitions in the United States and recruit more heavily from college campuses there.”

Specifically, according to this Indian executive, “We have to accelerate hiring of locals if they are available, and start recruiting freshers from universities [in the United States].”

Previously, it should be noted, both Canada and Mexico announced in the wake of the Trump victory that they would indeed be willing to renegotiate or “discuss” NAFTA.

China may still apparently believe it can bluff Mr. Trump. But good luck to Beijing and its still export-heavy economic growth strategy if it thinks it can find foreign markets to substitute for America’s, with which it ran a $367 billion goods trade surplus last year. Good luck also to China’s efforts to maintain political stability if, as likely, declaring a trade war on such a crucial foreign customer raises unemployment.

America’s economic competitors are fully aware that its enormous trade surpluses have fueled much of their own, and global, growth for decades. The biggest change on this front represented by Trump’s election is that now a U.S. president clearly understands – and has been publicly touting – this indisputable reality as well.  In otherwise, for the first time in decades, America is led by someone well versed in “the art of the deal.”   

(What’s Left of) Our Economy: New Data Confirm but Slightly Downgrade Trade’s Boost to Recent U.S. Growth


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The government’s revised figures for third quarter 2016 gross domestic product (GDP) showed that, as per the advance data, stronger exports trade helped trade make its greatest relative contribution to U.S. inflation-adjusted growth since the fourth quarter of 2012 (0.58 percentage points of that quarter’s 0.09 percent annualized growth). But trade’s positive role was reduced slightly. Instead of generating 1.17 percentage points of the solid 2.87 percent annualized expansion, trade’s new growth contribution was pegged at 0.87 percentage points out of 3.12 percent annualized growth.

Total real exports and goods and services exports remained at record levels. Their growth rates, moreover, were still the highest since the fourth quarter of 2013. The total third quarter after-inflation trade deficit was revised down from $522.9 billion annualized to $521 billion – the lowest level since that fourth quarter of 2013. This shortfall fell quarter to quarter at the fastest rate since then as well. As a result of these improvements, the trade drag on growth during the current economic recovery fell further – to a multi-year low of 6.56 percent.

Here are the trade highlights from yesterday morning’s GDP report:

>The U.S. government’s revised reading for inflation-adjusted gross domestic product (GDP) in the third quarter of 2016 showed that trade still made its biggest relative contribution to economic growth since the end of 2010, but that this recovery-spurring role fell off from the results of the initial GDP report.

>Whereas trade’s growth contribution last month was pegged at 1.17 percentage points of a 2.87 percent annualized expansion, the new GDP figures showed that trade fueled 0.87 percentage points of 3.12 percent annualized growth.

>The latest growth contribution figure still stands as the greatest since the fourth quarter of 2012, when trade accounted for 0.58 percent of its negligible 0.09 percent price-adjusted improvement.

>This morning’s GDP report showed that in the third quarter, combined good and services exports rose a bit faster than estimated initially, meaning that they eclipsed the all-time records they set.

>Total after-inflation exports advanced by 2.44 percent sequentially, according to the new GDP data, to $2.1629 trillion at an annual rate. The quarterly growth rate was the highest since the 2.84 percent rise in the fourth quarter of 2013.

>These new figures compare with the original estimates of $2.1624 trillion annualized and 2.42 percent sequential growth.

>Inflation-adjusted goods exports in the third quarter are now judged to have hit $1.4783 trillion at an annual rate – a rise of 3.37 percent.

>Those figures are slightly lower than the $1.4793 trillion annualized and 3.44 percent increase reported in the initial third quarter GDP estimate, but are still the largest increases since the 3.72 percent achieved in the fourth quarter of 2013. In addition, the real goods export total is still a record high.

>After-inflation services exports increased by 0.72 percent sequentially in the third quarter, the GDP statistic now report, and reached $685.4 billion at an annual rate.

>That’s slightly better than the 0.53 percent advance and the record $684.1 billion annualized total previously reported.

>Total real U.S. imports grew more slowly in the third quarter than originally estimated, according to the new GDP figures.

>Last month’s 0.58 percent rise, to $2.6853 trillion annualized, was revised down to a 0.53 percent increase to $2.6839 trillion annualized. But the new level was still a new record.

>Real goods imports are now pegged at $2.1981 trillion annualized for the third quarter – slightly less than the $2.1993 trillion previously reported, and an increase of just 0.17 percent, as opposed to the 0.23 percent rise previously reported.

>But these increases still left real goods imports 0.15 percent below their all-time high – $2.2014 trillion annualized, during the fourth quarter of 2015.

>Inflation-adjusted services imports also rose slightly more slowly in the third quarter than reported last month.

>Rather than rising by 2.13 percent to their own record total of $483.3 billion annualized, they are now estimated as having increased by 2.09 percent to $483.1 billion – still a new record

>The new GDP figures also cut the estimate of the third quarter’s real total trade deficit from $522.9 billion annualized to $521 billion. That’s the best total since the $454 billion recorded for the fourth quarter of 2014.

>Moreover, the quarterly trade deficit decrease previously reported (6.37 percent), which was the biggest such drop since the fourth quarter of 2013 (11.54 percent), was revised down to 6.71 percent.

>Thanks to the steep decline of the real trade deficit, trade has slowed the current American economic recovery by just 6.56 percent in cumulative terms, translating into $154.7 billion in lost growth in constant dollars. As of the second quarter, the trade drag was 8.63 percent, and the previous third quarter estimate was 6.67 percent.

>Yet according to separate figures kept by the Census Bureau, the growth toll of the trade deficit heavily influenced by trade agreements and other trade policy decisions, is much greater. This Made in Washington deficit – comprised of America’s non-oil goods trade – had cut cumulative recovery-era growth by 16.05 percent, or $378.23 billion in real terms, as of the third quarter. .

(What’s Left of) Our Economy: The Case for Trump’s Carrier Jobs Policy


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Donald Trump’s initiative to prevent manufacturing jobs from being offshored from Indianapolis to Mexico (at least what we know of it so far) makes me feel like one of those “two-handed” economists that so frustrated former President Harry Truman. You know – the ones he complained would always give him an “On the one hand…on the other hand” answer when he was seeking clear advice. Here’s what I mean. (Spoiler alert: As you’ll see, however, on balance, the Carrier news is encouraging.)

On the one hand, I wish the President-elect had never vowed during the campaign to prevent the Carrier company from closing that factory and sending the production and employment south of the border in order to save on labor costs – or at least to punish it with tariffs if it proceeded. After all, individual offshoring decisions can be heavily dependent on the special characteristics of the products and/or markets in question. Therefore, it seemed the height of hubris and even folly to risk personal political credibility, or the credibility of an entire policy agenda (in this case, on trade) on stopping a single instance of such job flight.

Moreover, Carrier’s intent to carry out the operation by the middle of next year ensured that the new president had created an effective deadline that would likely force him to try to act before his new administration was fully in place. Addressing the problem before he even took the oath of office seemed even more ill-advised.

In addition, the kind of deal being reported, hinging largely on tax incentives for Carrier to stay stateside, wasn’t the kind I would have struck. As I’ve explained repeatedly, even with America’s remaining and often considerable productivity edge in most sectors of advanced manufacturing, tax-focused policies suffered too many shortcomings to prove an effective tool for reshoring, or persuading businesses not to leave in the first place.

For example, many multinational manufacturers in particular pay little or no actual taxes, whatever their nominal liabilities might be. Further, it’s difficult to see how a first world country like the United States – whose citizens rightly insist on first world levels of public services – could win or even be competitive in a tax-cutting competition with third world countries, where expectations of government are so much lower. (Unless Americans want to see their country’s budget deficits shoot even higher?) And when it comes to the flip side of tax breaks – subsidies – nothing that American leaders have ever proposed, or are likely to propose, is remotely in the league of the subsidy programs of countries like China.

Indeed, Carrier itself has a long history of offshoring even when offered or given tax incentives. As widely noted, the company had received breaks from Indiana shortly before it decided to export the Indianapolis facilities. And in 2004, the company actually turned down similar offers from New York State after announcing its intent to move production to the American South and to Asia. The numbers were simply too paltry.  (See the first link in the preceding paragraph.)

As a result, I’ve always favored what Mr. Trump emphasized during the campaign – imposing a stiff tariff on products that offshoring companies sought to sell back to the United States. As he rightly noted, access to the U.S. market remains paramount in the business models of nearly every business on earth that seeks world-class status. Consequently, conditioning that access on producing and employing domestically – no matter what the job and production flight destination – was the best bet to keep factories at home, to bring many back or induce new U.S. facilities, and to lure more foreign-owned capabilities.

And yet there’s that proverbial other hand – which strikes me as dominant at least in terms of Carrier’s Indiana facilities in particular. First, in conjunction with his repeated promise to kill the Trans-Pacific Partnership (TPP) agreement, it looks like Mr. Trump is determined to keep at least many of his trade and manufacturing-related campaign promises. This should be applauded both by trade policy critics and by anyone who believes that the yawning, chronic gap between politicians’ rhetoric and their actions has dangerously corroded American democracy.

Second, the President-elect’s initiative again signals his awareness that international trade and investment flows have been profoundly shaped by government – and therefore human – decisions; that these decisions at least as often reflect special interest priorities or simply mistaken perspectives as they do expert calculations of national interest; and that when evidence abounds that they’re doing more harm than good, they can and should be changed.

So at least for the next four years, Americans, and especially American workers, won’t have to be settle for leaders content to cry a few crocodile tears over trade-related job and production loss even while insisting that they’re the inevitable casualties of an impersonal, uncontrollable, and of course ultimately beneficial force called “globalization.”

Moreover, although the Carrier plan by no means rules out a more comprehensive, trade-centered response to offshoring over the next four years, Mr. Trump’s actions so far have also already usefully shed light on executive actions that can potentially make a difference before one is put into place, and that in certain cases might be superior alternatives to tariffs.

For example, it’s been speculated that the President-elect could use the reliance of Carrier’s parent company, United Technologies (UT), on government military contracts to keep the Carrier factories state-side. Ideas along these lines have also been proposed in Congress.

UT apparently isn’t devoid of leverage, either – e.g., it’s the sole supplier of engines for the new F-35 jet fighter. But does an American company really want to threaten an incoming president – and the country as a whole – with withholding a product crucial for national security? Be very, very skeptical.

In this vein, Mr. Trump also seems to be in the process of showing that the bully pulpit powers of the presidency still matter. Carrier’s Indiana offshoring decision attracted national attention because of some special factors. It both took place during a presidential campaign, and generated a video that went viral and dramatically illustrated the outrage and anguish felt by the workers seemingly fated to lose their livelihoods.

But most other such corporate moves fly under the radar, especially the national media’s. The president-elect seems determined to make sure that offshoring decisions become headline news and therefore that heat will be felt by politicians in both major parties who have grown accustomed to blithely rationalizing them with the “impersonal forces” argument – unless they’re ignoring them altogether.

Appreciating the bully pulpit effect also rebuts a criticism already widely being made of the Carrier deal – that it will simply persuade other companies to threaten to move factories overseas in order to get juicy tax breaks. As the Carrier-United Technologies latest reaction to this controversy has made indisputably clear, most businesses hate the kind of bad publicity that Mr. Trump’s spotlight has generated. They’ll like it even less if a President of the United States publicly accuses them of extortion – especially a chief executive who’s proved he can connect with large percentages of the electorate, and as a result who’s demonstrated over and over again that he can break the major rules of American politics and come out a winner.

Im-Politic: It Was Trump – and Nationalism – That Killed TPP for Good


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However understandably it’s been overshadowed by the earthquake election of 2016, the demise of President Obama’s Trans-Pacific Partnership trade deal (TPP) is a very big, indeed historic, deal. Think of it this way: Do you know how many times since 1950 that a trade agreement concluded by an American administration has been turned back by public opposition? Try “none.”

As a result, it’s vital that trade policy critics correctly understand the ingredients of this victory – if only because they’ll decisively influence the nature of alternative approaches able to pass public and legislative muster. And in this vein, it’s becoming apparent that left-of-center trade activists – who deserve most of the credit for organizing impressive campaigns of opposition to U.S. trade policy since the NAFTA fight of the early 1990s – have especially important lessons to learn. The biggest ones: first, that Donald Trump’s election as president delivered the coup de grace against TPP; and second, and that his fundamentally nationalist arguments made the trade critics’ movement genuinely, and victoriously, bipartisan.

Just to review the history briefly, in 1950, President Truman decided that his plans to create a global trade body with strong enforcement powers were going nowhere, and so the White House announced in December that legislation to approve the globally endorse International Trade Organization would not be put before Congress.

Over the following six and a half decades, Congress did formally or informally rebuff three presidential requests to renew the executive’s trade negotiating authority in conjunction with expedited “fast track” voting procedures. But when actual trade deals came before the House and Senate, all of them passed. Not even the financial crisis and Great Recession were able to generate winning coalitions against new trade agreements, as lawmakers approved deals with Colombia, Korea, and Panama in October, 2011, when the current (historically weak) recovery was still in a relatively early and not especially strong stage.

During all of these trade battles, left-of-center forces such as labor unions and environmental groups provided most of the opposition’s political and financial muscle, its lobbying strength on Capitol Hill, and its grass roots organizing. And considering how tremendously outspent these groups were by Big Business (including Wall Street), and how vigorously the national media tried to marginalize them, these groups performed heroically.

Both President-elect Trump and his Democratic rival, Hillary Clinton ran deeply divisive campaigns. And Mr. Trump’s displayed a clear penchant for assailing numerous liberal social and cultural sacred cows. So it wasn’t entirely surprising that trade critics on the left consistently tried to minimize the overlap between their positions on globalization and those of the GOP candidate. Much more surprising, and less defensible, is how this practice has continued and even intensified since the Trump victory.

The most egregious example seems to have come from Tobita Chow, who heads a Chicago-based political organization called The People’s Lobby and, more important, just wrote on the president-elect and trade for the nationally influential Campaign for America’s Future. According to Chow, although Mr. Trump opposed TPP, he “plans to pursue bilateral trade deals with a number of Asian countries, including with Vietnam, which is also part of the TPP. Expect Trump’s trade deals to be even more damaging for people in the US and abroad than the TPP would be.”

Working a different but related angle, Public Citizen’s Lori Wallach claims that although President Obama’s continuing push for the TPP “helped to elect Donald Trump…Trump himself did not derail the TPP – people power united across borders accomplished that first by delaying the TPP’s completion beyond its 2012 deadline and then by ensuring that a majority in Congress could never be built to implement the deal since it was signed 10 months ago.

By declaring he will formally bury the zombie TPP, the president-elect is merely acknowledging the obvious: The deal died under the weight of its own terms and could not achieve sufficient support in Congress.

If Chow is indeed speaking for much of the progressive community, then he’s vividly demonstrated that this faction has become just as oblivious to the concerns of working class Americans as the corporate-funded Clinton wing of the Democratic Party. Here’s why he has such a beef with the President-elect on trade. As he explains it, Mr. Trump’s fundamental mistake is basing his approach to trade

on his nationalistic politics. Trump has promised to step in and stop competition across borders, and to defend ‘real Americans’ against the immigrants and foreigners whom are too often perceived as threats to their livelihood and their way of life. And in trade policy, Trump is a protectionist. The very name, ‘protectionism’, implies that jobs and investment in other countries are threats, and that we can and should ‘protect’ the American economy against these threats. A protectionist like Trump would have us believe that if we throw up trade barriers and stop investment in foreign countries and force goods to be made in the US, then we can ‘bring back’ jobs and factories from China and Mexico and return to the middle-class economy that flourished between WWII and the 1970s. This is what is captured in Trump’s slogan, ‘Make America Great Again.’”

Chow goes on to sound like a charter member of the nation’s offshoring lobby, or a Mainstream Media columnist, by insisting that

[T]he slogan is a lie. You can’t ‘bring back’ jobs that don’t exist anymore. Manufacturing jobs are on the decline around the world–including in China. Economist Joseph Stiglitz sums it up: ‘Global employment in manufacturing is going down because productivity increases are exceeding increases in demand for manufactured products by a significant amount.’”

As I’ve written previously, countries much less important economically than the United States has long used their market power to influence multinational companies’ investment decisions and the contours of their supply chains to lure investment – and jobs – to their economies. Why does Chow believe that similar U.S. efforts are bound to fail?

I have other substantive issues with his arguments, but more important is Chow’s conclusion that what Americans should back instead is

what is sometimes called progressive nationalism: an agenda to pursue a progressive agenda across borders to create a more just and sustainable global society. And since, as progressives, we understand that the labor movement is central to all our struggles, this means that a core goal of progressive internationalism must be to increase the power and status of workers internationally.”

Does he really believe that this will be a winning message in American politics for the foreseeable future? Is there any evidence that the working class that rallied behind Mr. Trump (including many union households) would respond favorably? And if so, what does Chow believe has changed over the last quarter century? After all, progressives have made these points at every opportunity during that period’s trade battles. They never galvanized enough voters to win.

Which brings us to the main weakness of Wallach’s case. She’s right about “people power united across borders” delaying TPP’s conclusion and ratification – and about the importance of buying such time. But ultimately the deal was signed by all the countries involved, and most prospective TPP members with reasonably democratic systems made clear that the U.S. Congress’ ratification was crucial to bringing the treaty across their own various finish lines. The reason was obvious: America’s market would have represented nearly two-thirds of the final free trade zone.

Now ask yourself about TPP’s fate had Clinton won her expected victory this year. Can anyone seriously doubt that she would have pushed for a few cosmetic changes and then worked with pro-TPP Republican Congressional leaders to win a final passage sometime early in her first term that mirrored President Obama’s fast track triumph last year? In fact, as Wallach repeatedly warned before Election Day, when Mr. Trump seemed dead and buried and Clinton seemed sure to win the White House, a TPP vote during a lame duck session of Congress was entirely possible.

Mr. Trump’s election was the event that finished off the treaty for good – both because of his own opposition and because of the shock effect of his upset victory, which revealed that a substantially transformed Republican party electorate wasn’t about to take its cues on trade anymore from the likes of offshoring lobby hired guns like House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell.

In other words, President-elect Trump’s successful conversion of a critical mass of Republicans into energized trade policy critics who actually voted their convictions was what turned the opposition led for so long by the progressives into a truly bipartisan – and therefore winning – movement.

As a result, progressives face a major choice. They can ensure a more lasting defeat for job- and growth-killing trade deals – and lay the foundations for realistic plans to promote greater prosperity outside the United States, too – by acknowledging the political and substantive merits of more nationalistic American trade policies. Or they can keep inveighing against the President-elect and his approach, or provide at best niggardly support, and boost the odds that a genuine revolution in the politics of trade in the United States fizzles out.

(What’s Left of) Our Economy: Latest Data Show America Still Has a Big Productivity Problem


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There’s been so much earth-shaking political news in the last few weeks that I’ve neglected some of the key U.S. economic data series I’ve been following. Let’s rectify that with some abbreviated updates, starting with the productivity statistics that are the most widely followed: the labor productivity figures.

These data measure the American economy’s output in terms of just one input (worker hours), and therefore don’t tell us nearly as much as the multi-factor productivity numbers, which look at capital, material, technology, and a variety of other ingredients of what businesses turn out. But the labor figures come out on a much timelier basis, and are widely regarded as a gauge of the nation’s ability to improve living standards on a sustainable basis.

So it was definitely goods news that these numbers went up in the third quarter (at least preliminarily) on a sequential basis for the first time in four months. The preceding three-quarter stretch of sequential declines was the first such period since 1979 – which few Americans who lived through it remember fondly. But in the third quarter of this year, that string was broken, and labor productivity rose by 3.03 percent on an annualized basis. That was the best such performance since the 4.09 percent annualized sequential advance in the third quarter of 2014. And a little bonus: The second quarter’s most recent 0.60 percent decline reading at an annual rate was revised up to a 0.15 percent dip.

Sadly, though, this uptick still leaves the current economic recovery as a major labor productivity laggard. Here’s how it compares with its two predecessors:

1990s recovery: +23.01 percent

2000s recovery: +16.07 percent

current recovery: +7.50 percent

And let’s not forget – the current recovery is already longer than the 2000s expansion.

Manufacturing’s third quarter labor productivity growth (just under one percent annualized over the second quarter) wasn’t nearly as good as the overall U.S. number (which measures the performance of non-farm businesses). But manufacturing’s over the last year hasn’t been nearly as bad – though its second quarter sequential labor productivity loss was revised down to a 0.50% decline.

At the same time, manufacturing’s productivity gains during this expansion have been pretty feeble compared to its recent predecessors as well, as the numbers make depressingly clear:

1990s recovery: +46.78 percent

2000s recovery: +41.08 percent

current recovery: +22.93 percent

If you’re thinking to yourself something along the lines that “I didn’t hear much about productivity during this last presidential campaign,” you’re absolutely right. Both major party candidates did, however, speak continually about the need to revive domestic manufacturing. The chattering classes on both sides of the aisle seem convinced that this goal is (take your pick) incredibly cynical or incredibly naive. That’s a sure sign that they’ve been thinking even less seriously about productivity – and about the leadership role even a stagnant manufacturing sector has unmistakably been playing.

Tomorrow: the latest real wage figures.

And of course I hope everyone had a great Thanksgiving!

Making News: CNBC Interview on Trump Trade Policy Outlook


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I’m pleased to present the link to the streaming video of my interview on CNBC early this morning on likely early steps on trade by a Trump administration.  Click here for a great discussion with CNBC anchors Sara Eisen and Wilfred Frost on the demise of President Obama’s Trans-Pacific Partnership (TPP) trade agreement, the continuing challenge from China, and the prospects for revising the North American Free Trade Agreement (NAFTA).

And keep checking in at RealityChek for reports of new media appearances and other developments.

Making News: CNBC Op-Ed and Appearance Tomorrow Morning


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I’m pleased to announce the publication of my latest op-ed article, a piece on CNBC.com explaining why President-elect Trump will find that keeping his promises to overhaul American trade policy is not only good politics, but good economics.  Click on this link to read it.

In addition, as mentioned in the article, I am scheduled appear on CNBC’s “Worldwide Exchange” program tomorrow morning at 5:15 AM EST to discuss the piece and the outlook for the new administration’s approach to trade.  As always, if you can’t tune in, I’ll post a link to the streaming video as soon as one is available.

And keep checking back at RealityChek for news of future media appearances and other developments.

Im-Politic: Varieties of Democratic Denial

If you’re confused about the Democratic Party’s reaction to its 2016 presidential election loss and disappointing Congressional and gubernatorial results, join the crowd. Democrats seem to be propagating two clashing memes in the wake of Donald Trump’s triumph in particular. And although no one should expect the party to be speaking with one voice, or even a reasonably coherent voice, so soon after that outsider candidate’s upset victory, it’s hard to imagine Democrats rebounding quickly until this contradiction is resolved – and until they deal effectively with the internal weaknesses of each narrative.

On the one hand, any number of prominent Democrats and their friends have been crowing about their nominee, Hillary Clinton’s, victory in the popular vote, and grousing about the Electoral College.

On the other, it seems that an equal number are lamenting the party’s setbacks among white working class voters and consequent losses of big midwestern industrial states they’d looked at as strongholds. And still other Democrats seemed to be making both points – including President Obama at a press conference in Peru on Sunday.

Logically, the first viewpoint reflects a belief that Democrats were mainly victimized by a fundamentally unfair political system and that in a more perfect (and attainable?) world, would be celebrating “four more years.” The second of course suggests that the party needs major surgery to reclaim its political mojo.

Whoever wins the contest these claims seems to be setting up will surely control the Democrats’ main strategic moves for the upcoming 2018 off-year elections and, if they resonate with the voters, the next presidential contest. At the same time, both schools of thought suffer from serious, and possibly fatal, flaws.

The most obvious are being displayed by the “stand-patters.” It’s bad enough to bitch and moan about the Electoral College. After all, that’s the system created by the Constitution, and the rules it sets and imperatives it creates for campaigns are hardly a secret. Is this manner of choosing presidents perfect? Not by a long shot. But Americans are far from agreeing that the flaws outweigh the virtues, so it’s difficult to see what purpose these complaints serve for the foreseeable future other than jeopardizing some of President-elect Trump’s legitimacy, or the idea that he enjoys a mandate (which in fact seems to be their main purpose).

More fundamentally, however, let’s not forget what just happened on November 8 at the presidential level. The Democrats faced a GOP rival who gave tens of millions of his countrymen the willies about winning control over the use of nuclear weapons; who had never held political office; whose command of numerous critical issues seemed shaky at best; who arguably confessed to the crime of sexual assault on a video recording made public; who offended legions of women, Hispanic-, African- and Muslim-Americans, not to mention the loyal supporters of major Republican rivals ranging from Texas Senator Ted Cruz to his Florida counterpart Marco Rubio, not to mention former GOP presidential nominees John McCain and Mitt Romney, and not to mention an unusually popular incumbent president; and who faced myriad legal questions about his business operations. And did I mention that the Mainstream Media made a habit of calling him and his most extreme supporters crypto or overt fascists?

And this same Republican won some 47 percent of the popular vote – in addition to displaying state-level supremacy in every major region of the country. Can you imagine how well a Trump-ian candidate who avoided even one of those former certain deal-breakers would have done? Who wasn’t handicapped by doubts about his minimal suitability and qualifications for the presidency? The landslide could have been Reagan-esque. As Clinton herself asked in late September, “Why aren’t I 50 points ahead?”

Of course, the former Secretary of State labored under her own difficulties – mainly due to her creation, along with her husband, former President Bill Clinton of what was in effect a foreign bribe solicitation machine in the form of their Foundation and Global Initiative; to her reckless mishandling of classified information; and to her lying about both sets of misdeeds. But compared to Mr. Trump she was normal and, even more important, safe – qualities American voters typically prize almost to excess. And Democrats both at the top of the ballot and many levels down still found their ambitions, their programs, and their experience rejected in state after state.

So as far as I see it, the case for a thorough Democratic overhaul looks by far the stronger. But those critical of the party’s current approach will face major obstacles, too. For example, there’s strong agreement among the overhaulers about the party’s failings in blue-collar precincts. According to Vermont Senator Bernie Sanders, who challenged Clinton powerfully from the Left during the Democratic primaries: 

I think that there needs to be a profound change in the way the Democratic Party does business. It is not good enough to have a liberal elite. I come from the white working class, and I am deeply humiliated that the Democratic Party cannot talk to where I came from.”

In the words of Minnesota Congressman Keith Ellison, a leading candidate for party chairman:

The truth is that we have got to make America work for working people again.

We have to have a shared prosperity. We have to make that our job number one….people want a better economic playing field for working Americans. And they’re voting for it. Our job is to make sure that people know that the Democratic party is the party that is going to deliver that for them.

But what these statements make clearest is that the obstacle confronting such Democrats as they attempt this reorientation is one of the most formidable that politics can create: credibility. That is, which party do they think occupied the White House for the last eight years? And why was it so oblivious to the struggles of the middle class and the working class and the working poor? As Sanders himself sees it, the Democrats had become

more concerned about raising money from wealthy individuals than they have been about bringing working people into the party and taking on the billionaire class, taking on Wall Street, the drug companies or the insurance companies.”

As implicitly admitted by Ellison, shared prosperity was not the Democrats’ top priority during the Obama years. The Democratic party had not delivered for them. So why would any thinking American automatically take seriously the notion that the party will turn over a new leaf, especially coming as it does on the “death bed” of a recent election defeat?

No one should count the Democrats out, even for the next two years, much less for the next four or longer. As made clear by the last few elections – featuring Obama presidential victories alternating with Republican off-year waves – the voters’ mood is too volatile. Events are too unpredictable – especially abroad. And you don’t have to be a cynic to understand that major issues tend to look much more complicated from the Oval Office or the halls of Congress than they do on the campaign trail.

But as made clear by Hillary Clinton’s overwhelmingly negative campaign against Trump, you can’t beat something in politics with nothing. And until they come up with a reasonably unified message, Democrats aren’t going to be able to offer much of an alternative to Mr. Trump.