I don’t mean to be Johnny One-Note, here, but just in the last 24 hours, I’ve found even more recent material putting the kibosh on the idea that domestic U.S. manufacturing is in renaissance mode.
Exhibit A: A new post in IndustryWeek advising American manufacturers “How to Get the Most Out of Your Aging Factory.” Translation: Capital spending by U.S.-based industry looks to be going nowhere fast; therefore, manufacturing companies for the foreseeable future will face the challenge of squeezing more output out of their existing stock of machinery. And P.S. – most of this stock is more than 10 years old, the first time such equipment has been this out of date (in principle anyway) since 1938.
Capital goods represent a huge chunk of domestic manufacturing. I couldn’t find their share of output, but this year they amount to nearly 46 percent of the nation’s total manufactures exports. If domestic industry itself hasn’t been buying these products robustly, how is a U.S manufacturing renaissance supposed to have started? Just as important, where is it supposed to come from going forward?
Exhibit B: Not one, but two big Wall Street firms are projecting that the capital spending surge that so far has been one of the big missing ingredients in the current weak recovery won’t materialize, and indeed, that expenditures will slow further. This conclusion is especially important because, if true, it would indicate that capital spending by U.S.-based non-manufacturing companies won’t return to its historic levels, either, and therefore won’t make up for the aforementioned reticence of manufacturers themselves. A major reason cited for the deceleration of capital spending – demand in the U.S. economy simply doesn’t justify splurging on new plant and equipment.
Of course, Wall Street firms aren’t always right about the economy. (See: “Financial Crisis.”) And the Bloomberg article reporting their forecasts also made clear that Wall Street’s collective views are far from unanimous. But the Goldman Sachs and Morgan Stanley reports dovetail so well with Exhibit A – which appeared in America’s leading manufacturing trade publication – that even the bubbliest industry cheerleaders need to take note. If only they’d respond with stronger support for the trade and other public policy changes so urgently needed to spark a real manufacturing resurgence, rather than shaking their pom poms more vigorously.