So here I was, planning to spend a nice, quiet, blogging-free day on this Fourth of July, when some casual web surfing revealed that the Financial Times, a newspaper I genuinely respect, runs an article besmirching President Trump’s record on reviving manufacturing. And it did so in an unusually intellectually dishonest way.
The Times‘ news coverage usually plays it straight on Trump-ian issues like trade and manufacturing, however vehemently its editorial page opposes the President’s stances. But in its review today of the current U.S. economic recovery (which this month became the longest in American history), it claimed that “The relative weakness of the current economic expansion is owing to the underperformance of the manufacturing sector.”
Fair enough. But then came this contention:
“Despite Mr Trump’s rhetoric in the 2016 election campaign about sparking a revival in the traditional industrial regions of the US, this expansion has been overwhelmingly based on services, which were responsible for two-thirds of the increase in value added from 2009 to 2018.”
And that swipe was completely inexcusable. Perhaps worse – it’s transparently and incompetently inexcusable. Because Donald J. Trump wasn’t President for most of the current recovery, which began in the middle of 2009.
In fact, when you look at the relative performance of manufacturing under Mr. Trump, and under his predecessor, Barack Obama, it becomes embarrassingly clear that industry through 2018 (the latest data year examined by the Times – and naturally so, since it’s the last full year for which statistics are available) has fared much better in the Trump years, and made a far greater growth contribution. Here are the numbers.
Between 2009 and 2018, in terms of real value-added (the measure of output properly used in the Times article), the U.S. economy grew by $3.3576 trillion. Manufacturing production increased by just over $300 billion. So industry only contributed 8.94 percent of the growth during this period.
But then break down these developments by administration, and…what a difference! Under President Trump, starting in 2017 and running through 2018, the total economy in real value-added terms expanded by $907.2 billion. Manufacturing’s contribution totaled $140.5 billion – or 15.49 percent.
During the 2009 through 2016 Obama period, total real value-added increased by $2.4504 trillion. Manufacturing’s contribution was $159.7 billion – or 6.52 percent. That’s way less than half of its contribution during the Trump years.
Moreover, nearly 61 percent of manufacturing’s growth during the Obama administration took place in a single year – 2009-10. That’s when industry engineered a strong comeback from a near-death experience during the Great Recession. In other words, once the economy regained something like a normal footing, annual manufacturing growth slowed practically to a standstill.
Another way to illustrate manufacturing’s out-performance during the Trump years. In 2016, in standstill terms, manufacturing real value-added represented 11.29 percent of after-inflation gross domestic product. Fueling 15.49 percent of the economy’s overall inflation-adjusted growth over the next two years is what’s known as “punching above your weight.”
In 2008, manufacturing real value-added accounted for 12.94 percent of the total economy in constant dollar terms on a standstill basis. And from then through 2016, it fueled 6.52 percent of total price-adjusted growth. That’s known as “punching below your weight.:
Is American manufacturing today “Great Again?” In my view, it’s clear it’s got a long way to go (and no more so than in reducing its gargantuan, chronic trade deficit, a key measure of global competitiveness). Moreover, so far this year, domestic industry has gone through a tougher slog. In fact, since July, 2017, after-inflation domestic manufacturing production has been down on net – which means that it’s been in recession. (And which also means I should have caught that development when the last Federal Reserve industrial production figures – for May – came out. So apologies for that oversight.)
But even a poor full 2019 for manufacturing could still leave the Trump record considerably better than Obama’s. And for the time period examined by the Times, despite the impression it tried to leave, there’s simply no contest. In fact, you could call the report manufactured news.
And before I forget: Happy Birthday, America!