A sector of the economy that’s supposed to be enjoying a renaissance should be growing faster than the other sectors, right? If so the new Commerce Department figures on the U.S. gross domestic product (GDP) by industry and its growth make clear once again that American manufacturing doesn’t cut it by this key measure.
U.S. industry did outperform the rest of the economy early during the current economic recovery – which proved little, since it nosedived so much more dramatically during the recession. But the new Commerce figures, released yesterday, reveal that those days are long gone.
According to Commerce, in terms of a gauge called “real value-added,” American industry not only under-performed the rest of the economy in 2012 and 2013. But after a good stretch starting in the middle of 2013, the sector returned to deep laggard territory in the third quarter of 2014. Whereas inflation-adjusted overall U.S. growth hit five percent at an annualized rate from last July through September, manufacturing real value-added inched up only at a 0.5 percent pace.
Another way of illustrating the trend is by examining how much of the whole economy’s real growth manufacturing has been generating. For 2012 and 2013, the Commerce data show, the manufacturing contribution was 3.91 percent and 7.73 percent. That’s unimpressive because both numbers were much smaller than manufacturing real value-added’s share of the economy on a static basis – 11.95 percent and 11.86 percent, respectively.
In the second quarter of last year, manufacturing’s real growth contribution zoomed up to 17.61 percent. But in the third quarter, it sank all the way back to 1.60 percent.
These new numbers are especially interesting in light of President Obama’s claim in this week’s State of the Union address that the nation’s industry is “bustling.” Let me offer him and other manufacturing cheerleaders a deal. I’ll agree to call the sector’s performance renaissance-y or bustling – once they convince the Oxford English Dictionary to redefine those words.