Although it’s been almost totally overlooked in the excitement over possible deal to end the Greece debt crisis (or maybe kick the can down the road further), it’s hardly bupkus that the U.S. government has just told us that an historically weak recovery has been even weaker than we’ve thought.
The Commerce Department this morning just came out with its annual report on the economic performance of each of the 50 states, and as usual, it contained a figure for the American economy overall. What was less usual is that the inflation-adjusted growth till now recorded for 2011, 2012, and 2013 was revised – down.
According to Commerce’s Bureau of Economic Analysis (BEA), real GDP in 2011 grew only by 1.40 percent, not 1.60 percent. After-inflation growth for 2012 was 2.10 percent, not 2.50 percent. The only bright spot was 2013 – during which the real increase in the gross domestic product (GDP) was revised up from 1.80 percent to a still drecky 1.90 percent. And maybe we can add to the good news list the 2.20 percent improvement in real GDP growth estimated preliminarily by BEA for last year.
It’s important to point out that this measure of the economy’s size and growth isn’t exactly the same as the one BEA uses for its quarterly overall GDP reports – like this latest one. But it’s not very far off, either, and raises even greater questions than Americans have already been asking about why the economy still looks so feeble six years after the current recovery is supposed to have begun. Also worth noting – BEA says that its GDP figures have now been revised for the entire 1997-2013 period, but only the last three years’ worth of re-estimates were published this morning. The Bureau says the rest will be out shortly, but also that those latter year changes were the biggest. .
As usual also, this annual BEA report contains figures on manufacturing. Such gross output numbers aren’t considered as accurate a gauge as the value-added data BEA also publishes. But again, they’re not chopped liver. And they add to the numerous nails driven for years now into the coffin of manufacturing renaissance claims.
These new data show that – again, preliminarily – manufacturing outgrew the economy on an after-inflation basis by 3.31 percent to 2.21 percent in 2014, and that’s a solid performance. But today’s report also makes clear that this manufacturing output boost has been far from typical in recent years. Indeed, 2014’s rise followed a three-year stretch in which manufacturing actually lagged the overall economy’s weak growth by a considerable margin.
And over the longer run, manufacturing’s output has been even less impressive. We won’t have any quarterly output figures by state (and presumably therefore for national manufacturing) till next summer, so it’s not yet possible to compare the growth of the economy as a whole with that of manufacturing since the current expansion began – in mid-2009.
But we can look at the full-year 2009-14 stretch, and those figures show that during this supposedly renaissance-y period, manufacturing did outperform the nation as a whole – but just by 11.44 percent to 10.08 percent in real terms. Moreover, during the previous expansion, when no one thought the sector was doing well, manufacturing’s out-performance in growth terms was much better – 25,11 percent to 16.45 percent, holding prices constant.
Further, much of manufacturing’s edge during this recovery clearly stems from the dizzying scale of its nosedive during the recession. These BEA figures show that from 2007 through 2009, real manufacturing production sank by 10.29 percent – much more than the 3.22 percent drop for the entire economy. In fact, manufacturing’s real demise was so great that, as of the preliminary 2014 figures, it still hasn’t recovered all of its losses during the downturn (though at least finally it’s close). But the overall economy is 6.53 percent larger than in 2007. It’s almost enough to make me feel guilty about mentioning that even these paltry real manufacturing growth figures are almost certainly inflated – by the almost certain under-count of electionics industry deflation I’ve discussed before.
As you economy mavens know, nothing known about GDP and manufacturing trends this year signals any major change in these dreary stories. But since when have the facts ever fazed the manufacturing or broader economic hopium pushers?