(What’s Left of) Our Economy: Just When Did U.S. Manufacturing’s Current Recession Begin?

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U.S.-based manufacturing went into its latest recession in April, and I missed it. Or did I? Once I realized my apparent oversight, I went back to the figures and realized that, although the definition of a recession that I’ve long used (two consecutive quarters of cumulative output shrinkage) is clear enough, figuring out what start date to use has been anything but throughout the current economic recovery.

For example, between April, 2018 and April, 2019, inflation-adjusted manufacturing output (the measure I’m using here, and the measure used by the Federal Reserve when it puts out its industrial production statistics each month) dropped by 0.14 percent. So even though it wasn’t down much, it was down on net for a full year – or four straight quarters.

That recession came to an end in May of this year, when industry’s after-inflation production grew by 0.25 percent on-month. But manufacturing was still mired in another recession – one that began in July. How could that be? Because between May and July of last year, price-adjusted output climbed by 0.43 percent – enough to push it back to 0.39 percent higher than the May, 2019 level. Since that time period covers more than two consecutive quarters, it qualifies as a new technical recession.

Moreover, even though between May and June of this year, constant-dollar (i.e., inflation-adjusted) manufacturing production advanced by another 0.43 percent, that still wasn’t enough to push it out of technical recession territory. The reason? Between last June and July, such output improved – by 0.43 percent itself. So since last July, it’s still down by 0.36 percent on net.

And if real manufacturing production doesn’t pick up even faster over the next few months, its current recession could continue for several more months, because last year, it continued growing healthily through December.

Interestingly, even though the U.S. economy has been in recovery mode since June, 2009, this current technical manufacturing recession is far from the first. I’ve counted five alone between January, 2012 and November, 2016. Here they are:

Jan., 2012-Oct., 2012 (down 0.22 percent)

Dec., 2012-July, 2013 (down 0.75 percent)

Aug., 2013-Jan., 2014 (down 0.01 percent)

Feb., 2014-Sept., 2016 (down 0.11 percent)

Jan., 2016-Nov., 2016 (down 0.19 percent)

In addition, those last two entries show the type of rolling, overlapping character like that seen since April, 2018. And I’ve spotted at least one more such instance – the downturn that took place between February and August of 2013, when real manufacturing output dipped by 0.04 percent.

And one more – big! – complication: Although the U.S. economy began recovering from the recession that began at the end of 2007, American manufacturing still hasn’t. Sure, it’s grown since it hit bottom (also in June, 2009). But as I’ve been pointing out ever since, it’s never grown enough to better that December, 2007 peak and in fact at present remains 2.09 percent smaller in terms of after-inflation production that at the recession’s onset. That’s more than a decade. And at its current rate of growth, the slump could easily turn eleven at the end of this year.

So getting back to my original question, is it fair to say that I missed manufacturing’s most recent recession during the current economic expansion if its post-2007 downturn never ended? As always, let me know your answers.

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Im-Politic: Unpacking the Ilhan Omar Mess

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It’s so utterly typical of how fevered Americans of all political stripes have become in the last decade or so (and especially in the Age of Trump, which began as soon as he declared his candidacy for presidency): The more verbiage that’s spilled over the clash that’s developed over controversial recent remarks by the four Democratic Congresswomen comprising the so-called Squad, and President Trump’s reactions, the more confused and dangerously simplistic this rhetorical gang war becomes.

So for the record, here’s my effort to spell out the only reasonable conclusions to draw about the main participants – and especially Mr. Trump and Minnesota Rep. Ilhan Omar, who have generated the most intense reactions pro and con. Also utterly typical of the times: I have no doubt that few of you readers on any side are going to be entirely pleased.

My bottom line: There can be no reasonable doubt that the President was deeply and offensively wrong when he tweeted that Omar and the other Squad-ers should “go back” to their troubled countries or origin and help fix their problems instead of “loudly and viciously telling the people of the United States, the greatest and most powerful Nation on earth, how our government is to be run.” But there can also be no reasonable doubt that there are entirely reasonable grounds for finding many of Omar’s own statements repugnant and insulting enough prompt speculation about her allegiance to the nation – in an emotional, if not a legal, sense.

Of course, the Trump tweets were completely and inexcusably inaccurate in the case of Squad members Alexandria Ocasio-Cortez of New York, Rashida Tlaib of Michigan, and Ayanna Pressley of Massachusetts – who are all American born. And since all four of the Squad-ers are women of color, he once more opened himself up to reasonable charges of racism, or at least expressing racist views – since his phrasing unmistakably equated being non-white with being foreign-born.

In my view, Mr. Trump was simply once again being stupid and sloppy. Still stupider on the President’s part: As a result, he’s legitimized at least some of the race-mongering of four politicians who have been among the most flagrant race-mongers seen in American politics since the heyday of segregationist resistance to the civil rights movement in the 1950s and 1960s.

But what I want to focus on here is that he plainly stepped in it, and needlessly deepened national divisions. Presidents should try to do the opposite.

In this vein, also deeply and offensively wrong have been the President’s “love it or leave it”-type tweets and subsequent remarks, whether meant for the Squad or for anyone legally or even illegally living in America. Everyone resident here enjoys full Constitutional free expression protections. Period.

Worse still was the “Send her back” chant that broke out during his rally in Greenville, North Carolina last week. All those participating should have their proverbial mouths washed out. For unlike the “go back” Trump tweets and statements, this call amounted to a demand that Omar be forcibly removed from the country for her opinions. The President (who certainly knows how to egg on a crowd) never encouraged these cries, and in fact looked pretty unhappy while listening to it for its 13-second duration. But he didn’t move to quiet it. So even though he has never expressed this sentiment and disavowed it subsequently, it’s entirely fair to charge that he badly flunked the leadership test passed with flying colors by the late Arizona Republican Senator John McCain during his unsuccessful presidential campaign of 2008.

Still, none of the above can create any reasonable doubt that Omar is an anti-American ingrate – and that as such, Americans (including President Trump) have every right to be offended by many of her own remarks, and even to wonder why (but not to favor expelling her), if her affinity with her adopted country is so threadbare, she’s chosen to stay.

This question of identifying with America is crucial because no one can legitimately question the loyalty or identity of Omar (or the other Squad-ers, or other Americans) for denouncing specific current and past U.S. policies and circumstances in the most vehement possible terms. Moreover, as noted in this must-read (especially for Trump supporters) Washington Post piece on many of the President’s own statements, Mr. Trump’s record is full of such sentiments, too. (Portraying the country’s very founding – as has become all too common on the far Left – to be an act grounded in white supremacy is another matter, in my view. But I haven’t found any comments from any of the Squad-ers deserving of that description.)

These allegations are easily supported by Omar’s unquestioned belittling of the September 11, 2001 terror attacks by violent Muslim jihadists, by her giggling dismissal of Americans’ fear of Al Qaeda, the jihadist terrorist group that planned and carried out these attacks, and by her call for lenient treatment for young Somali-Americans convicted of planning to join another jihadist terror group, ISIS. Slighting the importance of an event that claimed thousands of American lives and generated thousands more casualties, ridiculing the idea that the perpetrators are a major threat, and sympathizing with those seeking to join an equally hostile organization – this record is so far out of the range of normal that it does indicate a fundamental alienation from her adopted country.

The question of Omar’s gratitude matters, too. Again, it’s by no means illegal. But as opposed to given its long and deep roots – this Washington Post profile shows that it began practically from her arrival and continues today – it also quite naturally raises the question of why, during all these years, she hasn’t concluded that she’d be better off somewhere else. After all, she’s still quite young, she has most of her life ahead of her, she’s a gifted orator and politician, she clearly has had the means to leave for some time. And surely there are countries beyond America’s borders that haven’t conducted foreign policies so brutal and otherwise disgraceful that they haven’t provoked (understandable, as she sees it) jihadist retaliation, and that have been more welcoming to Muslims.

In other words, Omar has a perfect right to stay and engage in any Constitutionally protected expression she wishes. But I and others have an equal right to express outrage and also to proceed to ask “What gives?” without being slimed for intolerance. And to attack President Trump for blurring these vital distinctions. Meanwhile, all of us should be discouraged that so many of us evidently can’t keep them straight, either.

Making News: Video of Last Night’s Televised Trade War Interview Now Available!

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I’m pleased to announce that a video is now available of my appearance last night on the U.S.-Israeli TV network i24News covering the latest developments in the U.S.-China trade conflict.  Anchor Michelle Makori and I also discussed how the Trump administration’s national security concerns about Chinese telecommunications giant Huawei may be affecting trade diplomacy.

Click here and press the download button.  The link will work for only a few days, so don’t delay if you’re interested.

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

(What’s Left of) Our Economy: A Glass Half-Empty or Half-Full Government Report on Manufacturing?

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A total stunner – that’s the best way to describe the manufacturing and trade results of this morning’s Commerce Department report on economic growth during the first quarter broken down by industry. Unfortunately, they provide causes for both optimism and pessimism about whether President Trump’s tariff-centric trade policies will strengthen or weaken U.S. domestic industry over any analytically respectable period of time. And one big reason may be that manufacturers are still in the process of adjusting their business models to cope with the new policy environment.

The case for optimism rests on the quarterly growth (albeit a measly 0.03 percent) registered by American-located manufacturing despite a steep (20.25 percent) plunge in the sector’s huge and longstanding trade deficit. That kind of nosedive in the shortfall hasn’t been seen since the depths of the Great Recession – when manufacturing production was plummeting, too. (In this case, growth is measured by current-dollar “value-added,” which eliminates much of the double-counting that can result when economists calculate the production increases of final products without stripping out the previous output of the parts, components, and materials comprising them.)

The new data also contrasts with the last time of comparably meager quarterly manufacturing growth – 2016. During that final year of the Obama administration, industry grew sequentially by 0.63 percent in the second quarter, flat-lined in the third quarter, and 0.02 percent in the fourth quarter. The manufacturing trade deficit changes back then? In the second quarter, it grew by 8.96 percent, in the third quarter it increased by 7.52 percent, and in the fourth quarter is shrank – but by a bare 0.52 percent.

In fact, the last time a double-digit sequential decline in the manufacturing trade deficit took place (during the first quarter of 2016, when it sank by 10.17 percent), manufacturing production actually dropped – by 1.42 percent.

Manufacturing’s performance looks better when examined on an annual basis. Between the first quarter of 2018 and the first quarter of 2019, manufacturing value-added grew by 4.99 percent, while the manufacturing trade gap widened by only 1.55 percent. That’s greatly improved over last year’s yearly statistics by quarter.

Between the second quarter of 2017 (the first full data quarter under President Trump), and the second quarter of 2018, manufacturing production rose by 8.08 percent, while the trade deficit widened by 7.83 percent. The third quarter numbers: 7.23 percent and 12.45 percent. The fourth quarter numbers: 6.21 percent and 17.80 percent.

The second and third quarter results were clearly distorted by “tariff front-running” – businesses’ decisions to procure as much in the way of imports from China before major duties were imposed. That’s evident from the dramatic slowdown in the manufacturing trade gap’s first quarter annualized increase.

But for both sets of data, there’s a rub that should be obvious: Both between the fourth quarter of 2018 and the first quarter of 2019, and over the past year, the drop-off in the manufacturing trade deficit was accompanied by a drop-off in manufacturing’s growth rate itself. And that first quarter sequential 0.03 percent production increase was the worst such result since the fourth quarter, 2016’s 0.02 percent.

Optimists can take heart from industry’s ability to eak out growth despite continuing and even greater supply chain disruptions, and despite unusual inventory buildups triggered by tariffs and especially by their anticipation.  Also arguably encouraging manufacturing growth that’s ever less reliant on foreign inputs. Pessimists can observe out that the minimal growth indicates that adequate rates of manufacturing expansion still depend on robust net imports.

Both vantage points should recognize that domestic manufacturing remains in a state of uncertainty (as the current narrative holds) and sometimes outright confusion and turmoil – and that the threat of much more widespread China tariffs and increases on current China tariffs will greatly limit clarity going forward. Which means that both should agree that a valid verdict on the President’s trade policies won’t be possible for many months into the future.

Making News: Back on i24News on the Trade War…& More!

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I’m pleased to announce that I’m scheduled to return to the U.S.-Israeli TV network i24News tonight to help update the U.S. trade conflict with China.  The network’s programs are normally available only to paying subscribers, but you can watch the segment, slated to start at 7:40 PM EST, if you sign up in time for a free trial at this link.

If that’s not possible, as soon as I get it, I’ll post a link that will enable you to watch a video of the segment.

Speaking of podcast-like items, here’s the recording of last night’s interview on John Batchelor’s nationally syndicated radio show covering the same ground.

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

 

Our So-Called Foreign Policy: The Globalist Blob Wants the U.S. to Keep Looking for Trouble

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I’d like to offer a deal to anyone in America’s bipartisan globalist foreign policy establishment: You come up with defenses of the pre-Trump strategies and approaches you support that aren’t transparently ridiculous, and I’ll start portraying them as something other than sick jokes.

Judging by Richard N. Haass’ latest column for the Project Syndicate website, it’s clear that even if these members of the Blob (a wonderful nickname for this crew of former officials, genuine scholars, think tank creatures, Mainstream Media journalists, and business and finance leaders) cared about what I think, they’d flunk this test.

Haass is an especially important Blob-er because he not only served as a top policymaker under three Republican presidents (and in a more junior position during Jimmy Carter’s administration). He’s the President of the Council on Foreign Relations – the Blob’s oldest and most prominent think tank. (Truth in advertising: He also preceded me by two years at our Long Island, N.Y high school, but we had no personal dealings.)

But we should all hope that the advice he dispensed in government was much better than that he seems to have offered in “Asia’s Scary Movie.” Because his arguably underlying message – that the United States should reinforce its commitment to militarily defending the East Asia-Pacific region even though the region shows signs of fracturing on the economic and security fronts – is nothing less than a recipe for increasing America’s exposures to perils it can’t possibly control.

Especially and dangerously nutty is Haass’ clear belief that the United States should maintain its security relationships with Japan and South Korea even though the two countries are engaged in a literal trade war that’s disrupting interactions between their two gigantic clusters of information technology hardware manufacturing – which are so big that global trade and production in these critical sectors could take a major hit if the feud escalates further.

After all, as noted in that post linked just above, American ties with these two countries are “vital to its aims of balancing China and addressing the threat from North Korea” – both of which threats Haass correctly describes as growing and as worrisome as ever, respectively. In other words, in the event of trouble that may require a military response, the United States is relying on help from Tokyo and Seoul – which, in turn, are going to need to be working together.

But military relations between these two Asian countries have long been threadbare at best. Worse, their latest dispute – amid the backdrop of the rising China challenge and the ongoing peril from North Korea, which endanger both – has broken out because of grievances and grudges dating from Japan’s long and brutal occupation of the entire Korean peninsula in the decades preceding the end of World War II.

Given the history, it’s easy to understand why there’s no love lost between these two peoples. But alliances make sense only when the participants can count on each other for effective assistance if and when the shooting starts. Can anyone seriously believe that Japan and South Korea are going to get their act together suddenly if North Korean forces barrel across the Demilitarized Zone, or if Beijing moves against Taiwan? Or that responsible American defense planning should assume this rosy scenario?

Even worse, if trouble does break out on the Korean peninsula, nearly 30,000 American troops will be right in the middle. As I’ve written repeatedly, their vulnerability to superior North Korean conventional forces means that a U.S. President might need to use nuclear weapons to save them. For many years, North Korea’s inability to hit the American homeland with its own nukes made this threat (known as “extended deterrence”) credible and helped keep the peace. Given the North’s major progress toward precisely this capability, the current U.S. strategy could soon amount to risking the complete destruction of a big American city – or two. That may even be the case now.

In other words, given all these major, worsening Asia problems, the logical U.S. response is not stubbornly staying seated atop a powder keg. It’s to disengage ASAP. But any disengagement is such anathema to Haass and the rest of the Blob that he’s actually portrayed President Trump’s various statements criticizing the wisdom of America’s alliances as major contributors to East Asia’s stability.

Ironically, though, despite the Blob’s complaints, Mr. Trump’s biggest mistake along these lines clearly has been to continue his predecessors’ alliance policies, and even to double down in Eastern Europe – a region that could be as dangerous as East Asia.

That is, Haass and the rest of the Blob should be resting a lot easier. What a tragedy that there’s no reason to say that for the rest of us.

Making News: Returning to National Radio for a China Trade War Update

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I’m pleased to announce that I’m slated to return to John Batchelor’s nationally syndicated radio show tonight to help provide an update on the U.S.-China trade conflict.  A top U.S. official has termed recent weeks a “quiet period.”  But as the segment – featuring me, John, and co-host Gordon G. Chang – will make clear, there’s lots of activity under the radar.

To listen live on-line to this discussion, scheduled to start at 9 PM EST, click here.  As usual, if you can’t tune in, I’ll post a link to a podcast of the interview as soon as one’s available.

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

Im-Politic: America Needs to Get Its Citizenship Act Together

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Despite all the heat that it’s generated, the most important citizenship-related issue facing Americans today is not the one revolving around whether long Census form should seek this information from residents of the country. Instead, given all the clashing views of national identity that have emerged in recent years, the most important issue is developing a coherent concept of citizenship – what it should entail in terms of rights and responsibilities, and why .

Suggesting that the United States – a 243-year old country with a history that’s been a rousing success by any reasonable standard – hasn’t been thinking clearly about citizenship certainly seems odd. But the history actually couldn’t be clearer. And the confusion begins at the beginning. Although the Constitution refers to “the Privileges and Immunities of Citizens,” the document says remarkably little about what these are and, more important, about the reasons that such privileges and immunities should be enjoyed by one group of residents in the country but not others.

Even the choice of some of the most prominent privileges and immunities that are specified are peculiar, to put it mildly. For instance, the framers of the document designated citizenship as a requirement for holding the offices of President, U.S. Representative, and U.S. Senator. But nowhere does the Constitution’s body say explicitly that the Vice President must be a citizen – that provision had to wait until the ratification of the Twelfth Amendment in 1804. Nor does the document explicitly require federal judges to be citizens

At the same time, the Constitution’s federal office-holding criteria obviously assume that some citizens are more equal than others.  In the best known example, only “natural born” citizens (a term never defined in the Constitution or by the Supreme Court, and still debated, though it’s widely thought to mean a citizens born in American territory or born outside the United States or its possessions to citizens parents) are eligible to be President.  That’s why former Secretary of State Henry Kissinger or former California Governor Arnold Schwarzenegger could never realistically dream of becoming President.  They, and so many other prominent Americans, were foreign born and naturalized.   

But not just any natural born citizen can serve in the White House.  He or she needs to be at least 35 years old, and have lived in the country for fourteen years.  

As for voting in federal elections, it’s now a crime for non-citizens, but that’s only been the case since 1996. It’s by no means grounded in the Constitution, which generally authorized the states to decide eligibility for elections at all levels in the federal system. And the states have a long history of permitting voting by non-citizens.  (See here for a detailed history of non-citizen voting – by a supporter of this policy.)

Further muddying the situation: Many citizens have long been denied rights and privileges extended to other citizens, at the federal, state, and local levels alike. Women have expressly been classified as eligible for citizenship since the earliest immigration and naturalization laws, which were passed shortly after the Founding. But for more than a century afterward, female citizens faced all manner of limits (mainly at the state level but including on the national level) on their “privileges and immunities” that didn’t apply to male citizens – notably, the right to vote and the right to own property. (See here for some key milestones in the history of such limits and the pushback.) Children born in the United States are unmistakably citizens, yet they still don’t enjoy many of the rights of adults.

Equally confusing are the obligations of non-citizens legally resident in the country. They can’t vote for the federal (and in most cases, the state and local) officials who make tax policy. But especially if they hold green cards, they’re considered “tax residents” upon legal entry and must declare their total income and pay taxes required under U.S. tax law. 

The same goes for questions of war and peace: Legal non-citizens can’t choose the politicians who make these decisions, but they’re potentially required to live with the gravest consequences, since they’re obligated to register for the military draft (unless they’re women – who can’t register even if they are citizens) – and have been often during American history.  (See, e.g., here and here.)

It’s not that the Founders didn’t think about citizenship seriously at all. The very first Article of the Constitution (Section 8) very prominently sets out “establishing a uniform Rule of Naturalization” as one of Congress’ powers. As early as March, 1790, the first Congress in U.S. history followed suit by passing a naturalization act to establish a process and criteria for grants of citizenship. Approved – revealingly – during the same month that that year’s Census was mandated, the law held that foreign-born persons could become U.S. citizens only if they were free, white, lived in the United States for at least two years, resided in the state where they filed the application for one year, proved their “good character” to a court, and swore allegiance to their new nation. Children of citizens born outside American territory would be considered citizens, too. Five years later, the U.S. residency requirement was raised to the current five years.

The residency requirement – and its durability – hints at one possible answer to the question of why citizenship matters. This category was valued because it identified residents judged (to paraphrase an article by former law professor and current U.S. Congress-person Jamin Raskin) “fit to govern” – and by extension (quoting directly now) deserving of “the opportunity to participate in the essential and representative act of democratic politics [voting].” The flip side of this coin, as observed by a much more conservative legal authority, Alexander Bickel, was a position found in western political theory since classical times – which inspired so much of the Founders’ political worldview: “It is by virtue of of his citizenship that the individual is a member of the political community, and by virtue of it that he has rights.”

The reference to a political community is crucial, because what little the Founders collectively said about citizenship often focused on precisely this aim, as did the (admittedly minimalist) legislative and Constitutional record they created. Jefferson and Hamilton embodied fundamentally different approaches to arranging political power within the new nation and equally clashing ideas about the optimal future for the economy (largely because of their political philosophies). But they both agreed that great dangers were likely from a large influx of newcomers from countries whose views and political traditions diverged much further still from those prevailing in the existing U.S. population – and whose national loyalties might be suspect – and that a major response was needed.

The residency requirement that became law clearly reflected Hamilton’s belief that “Some reasonable term ought to be allowed to enable aliens to get rid of foreign and acquire American attachments; to learn the principles and imbibe the spirit of our government; and to admit of at least a probability of their feeling a real interest in our affairs.” (See here for the case for the Constitution as a key part of the Founders’ exercise in political community-building. Interestingly, the author’s main thesis is that membership in this community should be expanded to include non-citizens.)  

And yet, from literally the beginning, so many opportunities to link the creation of such a community to citizenship were went ungrasped. The Constitution could have specified that Congressional apportionment (determining the numbers of House of Representatives districts would be given to each state) must be based on numbers of citizens. Instead, it simply holds that the count should consist of “the whole number of free persons,” indentured servants, and “other Persons” (meaning slaves), who would be treated as three-fifths of the other two categories. Native Americans who were “not taxed” were the only category of resident explicitly excluded.

Moreover, because there is no Constitutionally mandated connection between citizenship and Congressional apportionment, there’s no link between citizenship and the allocation of electoral votes, either, since that figure is based in part on the number of House districts per state.

A third missing link – which seems a matter of recent bureaucratic custom rather than law: As of 2015, more than a hundred federal programs used Census data to determine the distribution of $675 billion in taxpayer funds to pay for everything from Medicare Part B to Medicaid to school lunches to highway construction.

And despite the loyalty oath required for naturalization, and the Founders’ concerns about divided or competing national allegiances, neither the Constitution nor any code of federal law has ever prohibited dual citizenship. Stranger still – many American citizens today legally serve in the militaries of foreign countries not engaged in hostilities with the United States, and even in senior government positions in foreign governments.

Numerous observers believe (and even hope) that these glaring contradictions in the treatment of citizens show that the concept is weakening.  I fervently hope that they’re wrong.  For I believe that the Founders were right.  In other words, as clearly, and as consistently as possible, it’s essential that the law define citizens as that segment of the population that enjoys a specific set of (mainly voting- and governing-related) rights in exchange for supporting the nation’s core political values. Otherwise, Americans will never preserve what one commentator has called “the cohesiveness and sense of community…vital to the success of popular government.”

But the bitter divisions that have opened recently in America’s politics and society demonstrate that the wildly incoherent approach to citizenship that’s evolved until now is giving the nation the worst of all possible worlds. If a completely chaotic disintegration of the country into a gaggle of hostile, quarreling groups is to be avoided, a clear choice needs to made – and the sooner the better.

(What’s Left of) Our Economy: New Signs of Life in U.S. Manufacturing Output – Including in Tariff-Affected Industries

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This morning’s Federal Reserve industrial production report provided further evidence that domestic U.S. manufacturing is moving past a spring rough patch. Rebounding also – output in many of the metals-using industries supposedly being decimated by President Trump’s tariffs on aluminum and steel.

As usual, though, because reliable data is so difficult to come by, the impact of U.S. duties on imports from China is much harder to gauge. But certainly there’s no reason to believe claims that industries using tariff-ed Chinese inputs are experiencing anything close to the damage widely reported.

Not that U.S.-based manufacturing is out of the woods. Its real output in June did improve on a monthly basis by 0.43 percent – its best such performance since December’s 0.64 percent gain. But domestic industry remains in a technical recession, with inflation-adjusted production down 0.36 percent since August – a stretch longer than the two straight quarters of cumulative decline that qualify as a downturn for most economists.

The table below presents the output data for the major metals-using sectors for the period since April, 2018 – the first full month in which the steel and aluminum tariffs were in place. As usual, the numbers for manufacturing overall are used as a control group.

                                             April thru April      April thru May      April thru June

overall manufacturing:          -0.14 percent        +0.11 percent         +0.54 percent

durables manufacturing:       +0.60 percent        +0.68 percent         +0.98 percent

fabricated metals products:   +1.93 percent        +1.14 percent         +1.09 percent

machinery:                             -1.28 percent        +0.91 percent          +0.12 percent

automotive:                            -3.94 percent         -1.75 percent          +1.05 percent

major appliances:                   -8.89 percent         -1.64 percent           -5.99 percent

aircraft and parts:                  +3.25 percent        +1.17 percent           +2.37 percent

These figures make clear that better constant-dollar output has been achieved during the last two months for manufacturing as a whole, for durable goods manufacturing (the super-category that contains most of the main metals-using sectors) and for three of the five leading specific metals-users. Especially interesting are the comeback being staged by major appliances (which face both metals tariffs and separate levies on large household clothes washers and dryers that began in February, 2018), and the deterioration apparent in aerospace (which arguably is being undercut by the safety problems experienced by Boeing).

Nonetheless, applause should be muted. For earlier in the post-metals tariffs periods, these metals users were clear production out-performers.

Statistics related to the China tariffs (whose first full month in effect was last August, 2018) continues to be plagued by great variations concerning the tariff-ed goods’ role as inputs for a wide range of domestic U.S. industries, uncertainties stemming from the differing classification systems used in the U.S. Trade Representative’s official tariff list and by the Federal Reserve in classifying manufacturing industries, and both the shorter duration of the levies and the increase in coverage since the first tranche was announced.

Keeping these enormous caveats in mind, here are results for a handful of sectors reasonably certain to have faced tariff pressure since last August. Each column measuring real output changes since last August.

                                                Aug thru April       Aug thru May      Aug thru May

overall manufacturing:            -1.03 percent         -0.79 percent        -0.36 percent

ball bearings:                           -1.77 percent         -2.62 percent        -2.89 percent

industrial heating equip:          -8.00 percent         -4.13 percent        -9.04 percent

farm machinery & equip:      -10.27 percent         -7.51 percent        -6.44 percent

oil/gas drilling platform pts:  +2.41 percent         +3.93 percent       +2.13 percent

On the one hand, these numbers provide the tariff opponents with some ammunition for claiming harmful effects from the levies, but not much. Two of the four specific sectors have lost momentum compared with the rest of manufacturing (ball bearings and industrial heating equipment), one has gained (farm machinery and equipment), and once has displayed a slight momentum loss – but also major monthly variation.

On the other hand, given that widespread (though highly uneven) use of Chinese inputs, the recent bounce-back in overall manufacturing production indicates that, if the China duties have been holding industry back – because of increased uncertainty or whatever other reasons have been offered – the impact has been both minimal and offset by other sources of strength. If true, that’s hardly a trivial consideration in judging the wisdom of and prospects for the Trump China trade war – since with each new batch of its own data, China is finding it more difficult to make that claim about its own economy.

(What’s Left of) Our Economy: Weak Real Wage Increases Under Trump Now Look Only a Little Less Weak

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Those same new official U.S. inflation statistics that reveal how President Trump’s tariffs have or haven’t affected consumer prices can also show whether American workers’ paychecks have been keeping up with the (slowly) rising cost of living. And the latest Bureau of Labor Statistics (BLS) data contains some good news for the nation’s employees, for its manufacturing workers in particular, and as a result for President Trump – although mainly in comparison to inflation-adjusted wages’ lackluster previous performance during his administration.

According to the new real wage figures (which bring the story up to June), price-adjusted pay for workers in the private sector overall rose by 0.18 percent sequentially last month – about in line with the results for the last few months. The year-on-year numbers, though, were much better. Price-adjusted wages improved by 1.49 percent between June, 2018 and June, 2018 – compared with their bare 0.09 percent increase between the previous Junes. (The BLS doesn’t look at government workers’ pay because that’s largely the result of politicians’ decisions, and thus says little about the state of the national labor market.)

The only fly in this ointment: This year so far, annual advances in private sector wages have lost some momentum. The June year-on-year rise was somewhat lower than its January counterpart (1.68 percent).

Real wages in manufacturing lately have made better progress, reversing a trend that’s held until very recently. On a monthly basis, they were up 0.19 percent in June, slightly better than the increase for the private sector generally. The June annual rise of 0.64 percent was less than half the overall private sector figure, but was much better than the change between June, 2017 and June, 2018. Yet that’s only because during that period, real manufacturing wages actually fell by 1.10 percent.

And over longer time periods, the manufacturing results have been similarly mixed compared with the trends for private sector wages generally. For instance, during this calendar year so far, the advance in real manufacturing wages has been more than twice as fast as that for all private sector workers – 0.37 percent to 0.18 percent. Alternatively put, whereas the annual gains in real private sector wages have slowed since January of this year, the 0.64 percent June figure for manufacturing represents a major acceleration from January’s 0.09 percent rate.

Constant dollar manufacturing wages have even closed the immense gap that opened earlier during the current economic recovery with overall private wages.

From the mid-2009 beginning of the ongoing economic expansion (American history’s longest ever) to this June, after-inflation manufacturing pay is up only 1.03 percent in toto versus the 6.01 percent increase for the overall private sector. In other words, the real private sector wage improvement, however modest in and of itself, has been 5.83 times faster.

As of the previous June, however, the gap was 12.05 to one – more than twice as great.

Nevertheless, when it comes to real wages, President Trump still faces a big political problem: Under his administration so far, they’ve risen much more slowly than during the most comparable Obama administration period, both for the private sector overall and especially for manufacturing.

Specifically, during the first 28 months of President Trump’s tenure, after-inflation private sector wages have increased by only 2.25 percent in all, and real manufacturing wages have inched up only 0.09 percent. During the last 28 months of the Obama administration, these numbers were 3.09 percent and 3.52 percent, respectively. If the real wage increases and the private sector-manufacturing gap don’t start getting considerably better soon, expect to hear a lot about such numbers from smart Democrats as the 2020 election approaches.