Im-Politic: A Left-Wing Attack on Trump Tariffs that the Offshoring Lobby Could Love


, , , , , , , , , , , , , , , , , , ,

Although I view it as being small-minded, short-sighted, and often over-the-top, I can’t completely fault many left-of-center American trade policy critics for failing to support (and even attacking) most of President Trump’s trade policy initiatives. Not so with Nomi Prins’ new indictment in The Nation. She’s taken this dimension of Never Trump-ism and “Resistance” to a wholly new and troublingly counterproductive level,

Mr. Trump has assaulted many of the trade deals that liberals, progressives, and many Democrats themselves long resisted (like NAFTA – the North American Free Trade Agreement – and the the Trans-Pacific Partnership – TPP). And he’s dealing decisively (so far!) with many other foreign trade policy transgressions and global trade institutions they’ve long assailed (like China’s dumping of steel and aluminum and wide array of other predatory trade practices, and the World Trade Organization, or WTO).

But many on the Left (and indeed, all over American politics) are understandably disgusted with some of the President’s rhetoric and record in immigration and gender issues and race relations, and with his family’s continuing domestic and foreign business ties (including with China), which look like conflicts of interest and at the least can look hypocritical (e.g., using immigrant workers both legal and illegal). Moreover, you don’t have to be a Never-Trumper to be upset with the ties between many Trump administration appointees and industries they’re supposed to be regulating.

Moreover, the President is attacking American trade and related globalization policies from an economic nationalist/America First standpoint. Having worked with left-of-center trade critics for nearly 30 years, I can tell you that this has never been their perspective. Though this is an overly broad generalization, they have been loathe to acknowledge that what’s best for America and what’s best for the rest of the world may not be identical – especially in the short and even medium-terms. As a result, their criticisms of many long-standing U.S. trade policies have often demonstrated at least as much concern for their impact on workers in developing countries as on their counterparts in the United States.

In fact, they tend to reject the idea that the main fault-line in the global economy has been the United States (and even the U.S.’ productive economy) versus “the rest”. In the view of these left-of-center critics, the main fault line instead is between the capital holders of the world versus the workers of the world.

The point of this post is not to insist that the nationalists have been right and the progressives et al have been wrong. It is to note that Prins’ new Nation piece disturbingly edges into Trump Derangement Syndrome territory. The main reasons: Her stated problems with the administration’s trade policies aren’t based on any of the above counter-arguments. Instead, her main anti-Trump points are almost indistinguishable from those made by the establishment supporters of the trade and globalist status quo – including not only the foreign policy “Blob” that has always backed seeking geopolitical and diplomatic gains even when they come at the expense of U.S. workers and the domestic economy, but those multinational business groups comprising the “global capitalist” interests that the trade policy progressives have always targeted!

Thus we hear from Prins both that the actual and prospective Trump tariffs have angered America’s “closest allies” in the Group of 7 industrial countries of Europe and the Far East, along with “our regional partners” in NAFTA. She’s repeated the canard that the President’s trade moves scarily resemble the Hawley Smoot tariff that “sparked the global Great Depression, opening the way for the utter devastation of World War II.” She consistently portrays the world’s other major economies as genuine paragons of free trade. (Not even China is chided.)

Even more striking, the main evidence she cites for the claim that the President “is sparking a set of trade wars that could, in the end, cost millions of American jobs” comes from Offshoring Lobby pillars like the U.S. Chamber of Commerce, the Business Roundtable, and the Brookings Institution (which, not so incidentally, takes lots of money from most of the leading foreign economies that will be hit by Trump tariffs).

It’s been noted often since the NAFTA’s negotiation in the early 1990s ushered in the offshoring-happy phase of U.S. trade policy that the resulting domestic political divisions have created some “strange bedfellows” alliances – i.e., coalitions that have had little in common other than common views on this front. Will the Prins article help usher in the strangest trade bedfellow coalition yet – between the left-wing anti-Trump resistance and the Fortune 500? Such groups are singing much the same tune on issues like immigration policy, so this prospect isn’t as far-fetched as it might seem. Further, don’t forget that voters who consider themselves Democrats and those leaning in this direction are viewing trade in general much more favorably these days than during any other recent period – at least according to polls. (Republicans and GOP leaners have shifted in the opposite direction.) And the appearance of an article containing these arguments, and evidence drawn from corporate and corporate-funded sources, has appeared in The Nation – long one of the American Left’s flagship publications – is another ominous sign.

One reason for optimism (if you agree that U.S. trade policy needs a big-time overhaul): Many left-of-center trade policy critics have (albeit grudgingly) supported the main thrust of the President’s trade policies. Even though most still retain their “globalist loyalties,” their complaints about the administration’s approach have centered on its instances of backtracking on Mr. Trump’s campaign promises, and (like me) on apparent inconsistencies. So it will be especially interesting to see if they push back strongly, or at all, versus Prins’ views. The answer could help determine the future of the politics of American trade policy – and of the policy itself.


Im-Politic: From Virtue-Signaling to Real Compassion on Immigration


, , , , , , , , , ,

As should have been clear from the start, President Trump’s decision to halt the practice of family separation for supposed asylum-seekers who try to enter the United States outside of designated ports of entry will by no means end this phase of the immigration policy wars.

After all, this reversal has come via executive order, and the administration’s new policy – which would prevent family separation by detaining both children who have sought illegal entry into the country along with the adults that have accompanied them until their asylum claims are approved – appears to clash with a 2015 Federal court decision appearing to mandate quick release of both the children and the adults, whether asylum claims have been vetted or not.

In addition, avowed immigration rights advocates have made unmistakably clear their dissatisfaction with the new administration stance – strongly indicating in the process that their main concern has never been family separation, but the practice of detaining any of these family members until their asylum claims can be examined.

In other words, these advocates want a “catch and release” policy to be applied to these newcomers as well – even though many and possibly illegal border crossers never comply with orders to return to immigration courts once their cases are up for judgment. So court challenges are inevitable, as is pressure on politicians to loosen such border control practices further, as the outcry over the previous administration policy appears to be widespread (though its depth remains unclear, as suggested by these Gallup results).

And since even ultimately the President has shown that he’ll allow apparent public opinion to override his restrictionist immigration instincts, it’s reasonable to expect the U.S. illegal immigrant population to resume rising, and to surge strongly if Mr. Trump loses a reelection bid in 2020. And don’t forget: Washington could well turn on another powerful magnet for more immigration, especially from the very low-income countries of the Western Hemisphere – broad amnesty for the DACA population, residents of the United States who were brought to the country as children by illegal immigrant parents.

It looks, therefore, all too likely that a new outburst of virtue-signaling fomented by the Open Borders lobby will generate major new costs for the American economy, including both the native-born population, recent legal immigrants, and even recent illegals. Principally, downward wage pressures will increase on workers from these groups with less than exceptional educations or skill levels. And taxpayers at all income levels will need to pay for the government-provided services these newcomers will need.

These services, moreover, aren’t simply confined to various forms of welfare (since a large majority of these arrivals themselves will be poorly schooled and largely unskilled). The population increases they fuel will need new schools, public transit, and fire and law enforcement capabilities, just to name a few. (For a shocking example of the price of failing to provide these new services, check out this recent Washington Post piece on a middle school located right near where I live in a Maryland suburb of D.C. that’s becoming dominated by MS-13 recruiting and recruits in part because of a ballooning student body attributable to the surge of unaccompanied Central American minors in 2014.)

At the same time, those Americans who reap most of the benefits from supercharged immigration flows will represent a much smaller group. As I showed in this 2014 Fortune column, it will be dominated by families high up the income ladder, who disproportionately use the cut-rate landscapers, housekeepers, and nannies who account for so many illegal immigrant workers; and from businesses and entire industries (like construction, hotels, and restaurants) which profit so handsomely from the continuing flood of cheap labor.

As I also wrote in that column, these inequities are far from inevitable, and reducing them is hardly rocket science. How? Through policies that result in the main beneficiaries of illegal immigration paying the lion’s share of the costs. Four years ago, I suggested a new tax on the super-rich, and on industries that heavily employ illegals. That’s still entirely appropriate. But other possibilities abound, too.

For example, how about channeling these newcomers to sanctuary states, and cities and other localities? Or to states that voted for Hillary Clinton for president in 2016? Or to the Congressional districts represented by the loudest critics of the family separation and other elements of the President’s immigration policy? (Yes, there’s lots of overlap here.)

Moreover, let’s not forget the celebrity world. Via social media campaigns, maybe the Samantha Bees and the Robert de Niros and the Kathy Griffins could be pressed to provide some financing for this new – or newly legalized – population. (And here, it’s vitally important to specify that big contributions to advocacy groups focused on indiscriminately helping newcomers work the system, and thereby encouraging greater numbers, a la the Clooneys this week, doesn’t cut it.) Considering its sometimes reckless, often hysterical, and usually one-sided coverage of this complicated issue, the Mainstream Media should be targeted for similar “shaming.”

It’s all about applying to immigration controversies a fundamental principle of fairness – user pays – and adding to it the idea of “cheerleader pays” And even if this proposal falls flat on its face, it will at least achieve a crucial goal: helping Americans distinguish between the virtue signalers and the genuinely compassionate.

Making News: A Major New Article on “America First” Foreign Policy, a Return to National Radio – & More!


, , , , , , , , , , , , ,

I’m pleased to announce that a major new article of mine on the future of U.S. foreign policy has just been published in The National Interest.  Titled “America First at Home and Abroad,” it looks at the heated debate over President Trump’s approach to international relations from a wholly new standpoint.

Rather than attacking or defending the President’s stances, the piece argues that Mr. Trump’s departure from the nation’s decades-long globalist strategy is much more bark than bite so far, describes what a genuine ‘America First” policy capable of attracting public and political support would look like, and makes the case that such a strategy is likeliest to serve U.S. security and economic interests going forward.

In addition, I’m scheduled to return to John Batchelor’s nationally syndicated radio show tonight at 9 PM EST to help John and co-host Gordon G. Chang provide updated coverage of President Trump’s China trade policies.  Click here to listen live on-line to what’s sure to be a timely and provocative discussion.

And last night, the Newsmax TV program “Newsmax Now” ran a backgrounder segment on U.S.-China trade relations based largely on my analysis of the subject.  Here’s the link; the backgrounder begins at about the 33:40 mark.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: More Evidence that Trade Wars are Absolutely Winnable for America


, , , , , , , , , , ,

Throwaway lines are among my favorite aspects of opinion writing, largely because in a simple, usually brief, and almost by definition understated sentence or two they can thoroughly debunk or at least gravely weaken shibboleths that have reigned virtually unchallenged for decades. And Financial Times columnist Rana Foroohar had a doozy yesterday.

As is well known by anyone who’s been closely following the development of President Trump’s trade policies and the uproar they’ve triggered, some of the biggest fears surrounding the prospect of the “trade wars” they’re deemed all too likely to ignite concern the impact on global supply chains. As explained this morning by Nobel Prize-winning economist and New York Times columnist Paul Krugman;

[C]orporations have invested trillions based on the assumption that an open world trading system, permitting value-added chains that sprawl across national borders, was going to be a permanent fixture of the environment. A trade war would disrupt all these investments, stranding a lot of capital.”

And since lots of capital would be stranded, lots of employment patterns worldwide would be disrupted, too – including in the numerous American manufacturing industries that have been thoroughly globalized and whose ability to assemble, further process, or produce goods in their U.S. facilities therefore depends on the smooth operations of these corporate networks.

Further, tariffs on imports from China allegedly would be especially damaging, since Chinese factories play such key roles in so many manufacturing supply chains, and since China’s prominence in globalized manufacturing in large part stems from so many special manufacturing strengths that the Chinese have developed – often by hook or by crook – in recent decades. If you need a compelling example, check out this early 2012 article on why Apple, among many others, has concentrated its industrial operations in the PRC.

At the same time, since Mr. Trump won the White House, not a few companies have either started relocated some production in the United States in response to actual or threatened tariffs, or made public remarks indicating that supplying the U.S. market from abroad would make no sense if trade barriers impeded their access. Other corporate leaders were saying even before Mr. Trump’s election that mounting protectionism and populism worldwide were bound to result in more localized manufacturing.   

So it’s become clear in recent years that however much they’ll complain about moving supply chains, business leaders scarcely view the challenge as impossible. Still skeptical? Recall how easy it’s been for them to send even the largest supply chains from inside the United States to outside American borders, or capitalize on the existence of overseas networks. And recall how quickly many of these transfers happened.

Just how fast they took place, and can still take place, is where Foroohar’s column comes in. In yesterday’s column, she echoed my point about supply chain movements that are either already underway or being contemplated:
“Over the long term, China and the US are headed towards regional supply chains for high-growth technologies of the future.” She continued – consistent with the conventional wisdom, “But in the short term, the interdependencies will be difficult to untangle.”

Then, however, came the kicker – which received no special emphasis from the author at all:

Several executives who supply Fortune 500 companies have told me it would take months if not years for the biggest US companies to break completely free of Chinese components.”

To repeat: Months – and at the outside years – for many companies to marginalize China’s role in particular in global supply chains. And then remember the reward: Greatly diminishing China’s still-burgeoning influence over the American economy and over the broader global economy, and in the process blunting the growing threat it poses to U.S. security interests both in the Asia-Pacific region and around the world.

That sounds like an appealing – indeed, no-brainer trade-off – to me. For an American leader hoping to disrupt U.S. trade and globalization policy for long-term gain, and facing numerous raucous short-term complaints, it should be an especially effective pitch to make, and an urgent policy target to prioritize explicitly and pursue systematically. Anyone seen any politicians like that lately?

(What’s Left of) Our Economy: May US Manufacturing Output Figures Could Feed Optimism or Pessimism


, , , , , , , ,

May’s Federal Reserve domestic U.S. manufacturing production figures presented a puzzling glass-half-empty-half-full picture. Overall sequential real output levels were down 0.63 percent – their worst such performance since July, 2013’s 1.06 percent decrease. Clearly playing a big role was a fire at a factory producing parts for especially popular pickup truck models, which helped depress after-inflation automotive production by 6.45 percent – its worst such performance since April, 2011’s 7.91 percent plummet.

Yet stripped of automotive’s woes, inflation-adjusted manufacturing output was still down 0.18 percent on month in May, and the month’s decline represented the third such fall-off in the last five months. Largely as a result, industry’s annual constant dollar production increase improved in May by just 1.85 percent – the slowest such rate since January’s 1.10 percent. The automotive decline helped drag down monthly production in the durable goods super-sector by 1.16 percent in price-adjusted terms – the biggest such decrease since July, 2013’s 1.42 percent. Real output in the smaller non-durable goods super-sector was off only 0.08 percent in May.

After-inflation manufacturing output is still down 3.85 percent since the start of the last recession – more than eleven years ago.

Here are the manufacturing highlights of the Federal Reserve’s release Friday on May industrial production:

>May’s Federal Reserve industrial production figures contained evidence for both optimism and pessimism about the U.S. economy and its domestic manufacturing sector.

>Optimists could reasonably blame much of the 0.63 percent sequential drop in real manufacturing output – the worst monthly decrease since July, 2013’s 1.06 percent decline – on a fire at a factory providing parts for popular U.S. pickup truck models.

>And indeed, the May overall manufacturing production swoon was led by a 6.45 percent on-month plunge in motor vehicle and parts output – the worst such performance since April, 2011’s 7.91 percent.

>But pessimists could note that even counting the automotive effect, the rest of domestic manufacturing posted a 0.18 percent dip in monthly inflation-adjusted output – the third such shrinkage in five months.

>Largely as a result, manufacturing’s annual growth rate in May was down to 1.85 percent – its weakest since January’s 1.10 percent. Between the previous Mays, real manufacturing production expanded by 1.87 percent.

>Automotive’s troubles also showed up in the results for the durable goods super-sector in which it’s found. Durable goods’ after-inflation production sank by 1.16 percent sequentially in May – its worst such performance since July, 2013’s 1.42 percent plummet.

>In addition, its 1.97 percent constant dollar May annual growth rate was durable goods’ slowest since January’s 0.94 percent. Between the previous Mays, price-adjusted durable goods production advanced by 2.18 percent.

>Inflation-adjusted output held up better in the smaller non-durables super-sector in May. Its monthly production slipped by just 0.08 percent.

>On-year in May, non-durables’ real production rose by 1.73 percent. As with durable goods, this growth rate is the slowest since January (1.28 percent), but the deceleration has been smaller. Moreover, this year’s May annual production rate for non-durables was better than that for the previous Mays (1.57 percent).

>Revisions for overall real manufacturing production were slightly negative. April’s previously 0.47 percent monthly increase was upgraded to 0.57 percent. March’s already downgraded 0.02 percent rise was downgraded to a 0.11 percent decline. And February’s downwardly revised 1.40 percent increase was bumped down again to 1.39 percent.

>Largely as a result, in price-adjusted terms, domestic manufacturing’s production is now 3.85 percent lower than at the onset of the Great Recession – more than eleven years ago, at the end of 2007.

>After-inflation durable goods output is now 0.10 percent below the levels it hit in December, 2007, and 0.13 percent less than in January, 2008 (its last actual peak).

>Despite their recent out-performance, the non-durables sector has fared much worse since the last recession hit. Its constant dollar output is down fully 8.35 percent from its previous peak, which came in July, 2007.

(What’s Left of) Our Economy: CNBC Interview Now On-Line, Plus Background Info & Context


, , , , , , , ,

I’m pleased to announce that the video is now on-line of my interview yesterday on CNBC on President Trump’s new announced tariffs on imports from China. Click here to see it.

As is usually the case, though, the segment was way too short to deal with all the aspects and angles of this decision that deserve attention. So here’s some material I prepared for the segment producer at her request the night before the broadcast. Sharp-eyed RealityChek regulars will find some of these points familiar, but to me, that just goes to show that many of the questions that have surrounded Mr. Trump’s trade policies since his inauguration remain either completely unanswered, or largely unanswered – as do many of the potential pluses and minuses. These talking points are as follows: 

“1. Although the White House may announce the tariff list tomorrow, it remains far from certain that all, or any, of them will actually be imposed. The Section 301 law providing their statutory basis permits the U.S. Trade Rep’s office 30 days to put them in place after the order formally appears in the Federal Register. In addition, the President could delay the duties up to 180 more days (i.e., after the midterm elections) if he determines that significant progress is being made in trade talks with China, or that the delay would encourage such progress.

“2. Less formally, these windows could enable the President to delay the tariffs’ imposition in order to encourage China to remain cooperative on the North Korea crisis. Mr. Trump has most recently declared his determination to go ahead with the tariffs despite acknowledging China’s help vis-a-vis Kim Jong Un, but at times in the past, he’s linked decisions to ease up or postpone such tariff decisions because of China’s purportedly cooperative attitude. And on a related issue, just before his summit with Kim, he explicitly called his decision to lift the “death penalty” on China telecoms firm ZTE a favor to Chinese leader Xi Jinping.

“3. I personally believe that any linkage between China trade policy and North Korea policy would be a serious mistake, as it assumes that Beijing is helping the United States defuse tensions on the peninsula as an act of charity, rather than a course of action that is squarely in China’s interest. As a result, linkage could reward China for taking steps it would have taken anyway.

“4. The President deserves major credit for recognizing that diplomacy and engagement alone have not sufficed to stem the economic and national security threats presented by China’s wide array of predatory trade and investment policies, exemplified most recently by its Made in China 2025 programs.

“5. In particular, Mr. Trump has recognized that U.S. allies are simply not serious about making significant contributions to a multilateral effort to combat China’s trade and broader economic predation. Similarly, he understands that the WTO is completely inadequate to this task, and that unilateral American action has long been essential.

“6. But his policies can be faulted in several respects.

“a. Some of his China-related goals seem flatly contradictory. Chiefly, the President says he wants to reduce the massive bilateral trade deficit America runs with China. But he also wants China to reduce its recent harassment of U.S. and other foreign companies and make it easier for them to do business in China. If the Chinese agree on the latter, much of the increased American (and other) corporate investment in China will wind up producing goods for export to the United States, thereby increasing the deficit.

“b. Tariffs on imports from China, all else equal, could well reduce the bilateral trade imbalance – especially if China opens its markets wider to U.S. exports, too. But the impact could be limited because shipments from other countries are likely to fill the gap to some extent.

“c. In addition, Mr. Trump should be paying more attention to the makeup of the trade deficit. In this regard, he has (erroneously) indicated that he would satisfied to see stepped up American exports of farm and energy products to accomplish much and even most of the deficit-reduction goal. But it’s much more important to narrow the gap in high value manufacturing industries, which make a much greater contribution to the American economy.

“d. The President is going to remain under attack on the tariff front from industries and sectors of the economy that might suffer losses, and these criticisms could well undercut GOP candidates in the upcoming midterm elections. He will also be criticized for taking measures the increase consumer prices. He could have preempted many of these criticisms in two main ways:

“First, earlier in his term, he should have strongly backed the border adjustment tax contained in the original Republican tax bill. This measure would have in effect both imposed a 20 percent tariff on imports and given a 20 percent subsidy to American exports. And since it would have been across-the-board, it would have provided protection and subsidies for both producers of finished goods (e.g., steel- and aluminum-using industries), and of the inputs for these finished goods.

“Second, he should be doing a much better job of persuading the American people that any change as disruptive as the new trade policies he’s begun to put into effect are bound to entail some short-term costs and sacrifices, but that the long-term benefits are well worth the candle. Tweets are not nearly enough. He needs a full-court PR press – Oval Office speeches, rallies, town hall meetings, the works.”

Another important point I wasn’t able to make: It’s true that, as the anchors and the other guest maintained, most economists think that trade deficits don’t matter to the health of a national economy. But as explained in the post linked here, this claim dangerously overlooks how trade deficits, and especially their increase, inevitably worsen the quality of the economy’s growth and makeup, and weaken the foundations of sustainable prosperity.    


Making News: Back on CNBC Today Talking Trump China Tariffs – & More!


, , , , , , ,

I’m pleased to announce that I’m scheduled to be back on CNBC this afternoon talking about President Trump’s newly announced China tariffs. The segment is slated to begin at about 2 PM EST, and you can watch on-line at this link, as well as on your cable and satellite systems. As usual, if you can’t tune in, I’ll be posting a link to the streaming video as soon as one’s available.

In addition, podcasts of my two latest national radio appearances (both on roughly the same topics) are on-line as well.  For my June 8 appearance on Breitbart News Tonight, click here and scroll down till you see my (misspelled) name. For my June 6 interview on The John Batchelor Show, click here.

Also, my views on trade policy were featured in a June 4 column by former U.S. Senate aide Jim Jatras on Here’s the link.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: Manufacturing Labor Productivity Growth is Looking Like an Endangered Species


, , , , , , , , ,

Federal Reserve Chair Jerome Powell stated yesterday that the U.S. economy is doing “very well.” Judging by the metrics that the central bank is supposed to focus on as a matter of law – inflation and the headline unemployment rate – that’s an eminently respectable claim. Based on another key measure of economic performance – labor productivity – it looks like whistling in the dark.

As known by RealityChek regulars, strong productivity growth is widely seen by economists as the best guarantor of sustainable future prosperity and rising living standards. And as also known, labor productivity is the narrower of the two such measures of economic activity tracked by the federal government.

But it’s the gauge that’s updated on the most timely basis, and the latest numbers – which came out last week – should be spurring alarm, not complacency.

These final (for now) results for the first quarter of this year both confirmed that output per person hour worked for the non-farm business sector (the broadest definition of the U.S. economy used in these studies) remains stuck in an historically slow-growth phase, and showed that labor productivity in manufacturing may be shifting into contraction.

The labor productivity performance of both these major sectors was revised down in the latest release from the Bureau of Labor Statistics (BLS). Rather than having grown by 0.70 percent on an annualized basis sequentially in the first quarter, labor productivity for non-farm businesses is now estimated to have advanced by only 0.40 percent. And in manufacturing, a 0.50 percent annualized increase is now judged to have been a 1.20 percent decrease. That’s its third such drop in the last five quarters.

A glass-half-full analysis would point out that the new non-farm business figure was better than that for the fourth quarter of last year (0.30 percent), and that the manufacturing fall-off followed a 4.20 percent fourth quarter jump.

But the new BLS report also presented manufacturing revisions going back to 2008, and they make clear that its labor productivity performance during this period has been far worse than even previously thought. (And it was already really bad.)

Let’s concentrate on how the new statistics have changed the picture for manufacturing labor productivity during the current recovery, and compare those results with those for previous recoveries – since such analyses yield the best, apples-to-apples, results.

Before the new data came out, manufacturing labor productivity during this expansion was reported to have grown by a total of 9.69 percent. That was less than a third of the rate achieved during the recovery of the early 2000s – which was also known as the Bubble Recovery that helped trigger the financial crisis and ensuing recession, and which last only six years versus. The current recovery is approaching its ninth anniversary.

And during the nearly ten-year long expansion that began in the early 1990s, manufacturing labor productivity surged even more strongly – by 45.86 percent.

The new manufacturing labor productivity growth number for the current expansion? Only 8.28 percent! That’s a downgrade of more than 14.50 percent!

Moreover, although the non-farm business labor productivity growth rate for the current recovery wasn’t revised down nearly as much – from 9.70 percent to 9.62 percent. But this figure, too, pales next to those of previous recoveries. During the bubble expansion, non-farm business labor productivity rose by a total of 16.03 percent. During the 1990s expansion, the rate was 23.25 percent.

By the way, don’t put too many hopes in the broader productivity measure – multi-factor productivity – to come to the rescue. Those numbers haven’t been much better.

Some productivity students have been arguing that it’s only a matter of time, and that recent technological advances will soon start super-charging productivity growth after a slow start just as they did in an earlier era of transformative technological change – the 1920s.

These optimists had better be right. Because if not, the only way to return American growth and living standards gains to their historic rates of improvements will be to flood the economy with credit in order to crank up spending. Feel free to scream if the date “2008” means anything to you.

(What’s Left of) Our Economy: The Real Deal with the U.S.-Canada Trade Balance


, , , , , , , , , , , , , ,

Extra! Extra! Read all about it! The nation’s globalist political and media classes have gotten it right on a major U.S. trade policy issue!

I’m talking about the numerous complaints issuing from American politicians, journalists, talking heads, and purported academic and think tank experts about President Trump’s decision to make Canada the focus of so much of his trade-related ire.

Mr. Trump is right about Canada maintaining sky-high tariffs and lavish subsidies in certain sectors of its economy, like dairy and lumber. (I’d add aerospace to this list.) But the idea that Canada represents one of America’s biggest trade headaches, and has been taking advantage of the U.S. economy left and right due to poorly negotiated trade deals, is completely belied by the numbers. And P.S. – it’s not even necessary to point to America’s services trade surplus with its northern neighbor to debunk the numbers.

The keys are recognizing the immense role played by energy in bilateral goods trade. Commerce in crude oil and natural gas is almost never the subject of the U.S. trade deals and broader trade policy decisions that the President – for the most part – has correctly lambasted.

Energy’s predominance is most apparent when U.S.-Canada trade in goods is calculated according to the measures used most prominently by the American government – total exports, and general imports. In fact, these headline data show that the U.S. oil and gas shortfall has typically been twice the size of the overall American merchandise trade deficit with Canada – meaning that when it comes to other goods (like manufactures) the United States has been running a surplus.

For example, in 2009 (the year the current U.S. economic recovery began), according to these figures, the United States ran an overall $20.18 billion goods trade deficit with Canada, a $45.75 billion deficit in crude oil and natural gas, and a $30.02 billion surplus in manufacturing.

Last year, the overall U.S. merchandise deficit with Canada had fallen to $17.50 billion – largely because the energy deficit had sunk to $16.45 billion. And the American manufacturing surplus reached $41.07 billion.

As many trade policy critics have rightly pointed out, the total exports and general imports numbers aren’t the best data for measuring U.S. bilateral trade balances. (They’re fine for America’s global trade balances, though, as the discrepancies that emerge in the bilateral accounts cancel each other out on a worldwide scale.) Instead, the most accurate picture is provided by looking at domestic exports and imports for consumption – i.e., the trade flows that concentrate on exports that are actually made in America (as opposed to being transshipped through the United States from countries where they originated), and on imports that Americans actually purchase for their own use (as opposed to products being transported through the United States to their final destinations).

But although these statistics reveal a much larger U.S. merchandise gap, along with deficits in manufacturing, oil and gas predominate in these figures as well. In 2009, the domestic exports etc numbers show a total American goods trade deficit with Canada of $52.89 billion – nearly 87 percent of which was in oil and gas. The manufacturing shortfall, moreover, was tiny – only $200 million.

By 2017, according to this measure, the annual U.S. goods deficit had risen to $64.84 billion. But the oil and gas deficit – which had shrunk dramatically in absolute terms due to the U.S. energy production revolution – still comprised a little over 73 percent of this total. And the manufacturing deficit was only $4.28 billion (out of a U.S. global total of more than $937 billion).

I can understand why President Trump views Canadian Prime Minister Justin Trudeau as a pro-globalist showboat. I agree. But when it comes to trade, and turning it into an engine of growth and domestic job creation, Mr. Trump has much bigger fish to fry – starting with the thoroughly and increasingly predatory trade policies pursued by his “good friend,” Chinese leader Xi Jinping.

(What’s Left of) Our Economy: America’s Real Wage Recession Drags On – Especially in Manufacturing


, , , , ,

In one sense, President Trump’s summit with North Korean dictator Kim Jong Un was well-timed – it’s inevitably distracting attention from the latest set of real wage figures (for May) released this morning by the Labor Department. The big takeaways: On a monthly basis, Americans’ inflation-adjusted hourly pay keeps going nowhere, and in fact, constant dollar wages for both the entire private sector and for manufacturing remained in technical recession. That is, they’re down on net for two straight quarters or more of economic activity.

The new data show that, for the private sector overall, real wages inched up sequentially by 0.09 percent in May after flat-lining in April. For manufacturing workers, they fell for the second straight month, with April’s 0.09 percent dip followed by a 0.19 percent drop in May.

As a result, on an annual basis, after-inflation private sector wages are unchanged, and such pay in manufacturing is off by 1.20 percent. Between the previous Mays, real wages in the private sector rose by 0.66 percent, and in manufacturing by 0.28 percent.

The new May statistics reveal that the private sector has been enduring a real wage recession since last June, as constant dollar hourly pay has declined by a cumulative 0.09 percent since then. As for manufacturing, its real wage recession dragged into its 28th straight month, with price-adjusted hourly wages down by 0.28 percent since January, 2016.

Just as worrisome, real wages in manufacturing are nearing the point of complete stagnation during the current economic recovery. Since mid-2009, they’ve advanced only by a barely perceptible 0.19 percent. The private sector’s performance during this period is only decent by comparison: It’s after-inflation hourly pay has risen by 4.27 percent during this nearly nine-year expansion.