(What’s Left of) Our Economy: New Fed Manufacturing Figures Nudge Tariffmageddon a Bit Further Away

Tags

aluminum, China, Federal Reserve, industrial production, inflation-adjusted growth, manufacturing, metals, metals tariffs, metals-using industries, real growth, steel, tariffs, Trade, trade war, {What's Left of) Our Economy

Today’s industrial production figures from the Federal Reserve showed not only that U.S. domestic manufacturing regained some strength in May following a string of poor monthly results. They also provided more evidence that President Trump’s tariffs have had little, if any, effect on the performance of either the metals-using industries impacted by levies on steel and aluminum imports, or of sectors supposedly affected by China-related duties.

Two more points come through pretty loud and clear from the new figures on domestic industry’s inflation-adjusted growth. First, the weakness displayed in April by manufacturing as a whole and by metals-using sectors could well have been confined to that month. Second, the safety problems revealed in the Boeing Company’s aircraft have begun to influence the picture and may distort the readings for several more months.

The overall readings for manufacturing were mildly encouraging, with the 0.22 percent sequential rise in real output representing domestic industry’s best reading since December’s 0.64 percent improvement. Revisions were ever so slightly positive.

Most of the leading metals-using industries – where the role played by tariffs is relatively easy to identify – fared better in May than in April, too, as the following table shows. The columns show the changes in after-inflation output for these sectors starting with April, 2018 (the first full month the metals levies went into effect) and each of the last three data months of this year. And as usual, the numbers for manufacturing overall are used as a control group.

                                             April thru March   April thru April   April thru May

overall manufacturing:          +0.45 percent        -0.07 percent      +0.89 percent

durables manufacturing:       +1.34 percent       +0.68 percent      +0.98 percent

fabricated metals products:   +2.76 percent      +1.88 percent       +1.73 percent

machinery:                            +2.31 percent       -0.12 percent       +0.11 percent

automotive:                            -3.10 percent       -3.86 percent        -1.55 percent

major appliances:                   -5.27 percent       -8.24 percent        -3.27 percent

aircraft and parts:                  +5.75 percent      +3.34 percent       +1.15 percent

durable mfg ex-automotive: +2.10 percent       +1.48 percent       +1.41 percent

In general, it’s clear that the metals-using industries are still losing growth momentum versus the rest of manufacturing. But do the duties deserve all or even much of the blame? If so, then why did so many of these sectors turn in better growth numbers in May than in April – especially automotive and major appliances? The latter’s relative comeback is especially striking, given that it’s been experiencing not only metals tariffs, but separate levies on large household laundry equipment and a weakness in U.S. housing. Ditto for automotive, where output has been highly volatile for many months.

The Boeing effect is apparent, too, from the falling output numbers since March, when safety problems started generating grounding decisions and airspace national airspace bans for its widely used 737 Max models. Further, both automotive and aerospace are major users of machinery and fabricated metals products.

The impact of the tariffs on products from China remains much more of a puzzle, and for the same reasons that have been apparent since their onset, in August, 2018. They have covered thousands of products, most of which so far have been intermediate goods, and their role as these kinds of inputs for manufacturing industries varies dramatically from final product to final product. In addition, Washington uses different manufacturing classification systems for designating the tariff-ed products and for measuring manufacturing production. The levies have been in place for a shorter period of time than the metals duties. And their scope has widened since the first batch went into effect in August, along with many rates having changed.

Nonetheless, here are some figures for the handful of industries for which I’m sure the numbers create a reasonably accurate picture, with each column measuring real output changes since last August.

                                        August thru March   August thru April   August thru May

overall manufacturing:       -0.45 percent           -0.96 percent         -0.75 percent

ball bearings:                     +0.22 percent          +0.11 percent        +0.01 percent

industrial heating equip:     -0.83 percent          -5.41 percent          -4.70 percent

farm machinery & equip: -11.65 percent         -10.27 percent         -7.51 percent

oil/gas drilling platform    +4.08 percent          +2.58 percent         +4.59 percent

   parts

Unfortunately, no consistent trend emerges. Two of the sectors’ improved between March and May (farm machinery and equipment, and oil and gas drilling platform parts), and two worsened (ball bearings and industrial heating equipment).

And although as long as the China tariffs continue , the future will provide results over a more statistically significant time frame, because the footprint of Chinese inputs in most of U.S. Manufacturing sectors will continue to be so broad and deep, their costs are likely to remain just as hard to discern.

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(What’s Left of) Our Economy: New Fed Manufacturing Figures Show Industry is Still Nicely Withstanding the Metals Tariffs

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aluminum, China, durable goods, Federal Reserve, growth, industrial production, inflation-adjusted growth, manufacturing, metals tariffs, metals-using industries, real growth, steel, tariffs, {What's Left of) Our Economy

This morning brought another poor result for U.S. domestic manufacturing – specifically, a 0.52 percent decrease in inflation-adjusted output that was its worst such performance since January’s 0.66 percent sequential decline. As a result, the temptation is to blame the Trump tariffs that have so dominated economic and business news headlines, but as usual, the data simply don’t support this claim.

Unquestionably, these new figures from the Federal Reserve point to a problem with American industry. Tariffs, however, look beside the point. Instead, the numbers reveal what looks like an April problem and an automotive problem, and especially where tariffs on metals are concerned – the major Trump-era levies that have been longest lasting, and where the affected manufacturing sectors are easiest to identify.

Here are the numbers for the economy’s chief metals-using industries. They start in April, 2018 (the first full months when the steel and aluminum levies went into effect). They show the growth rates between then and the last three data months. They include the statistics for overall manufacturing as a control group. And I’ve added two new pieces of information: the year-on-year real production changes for these sectors, and the data for durable goods manufacturing stripped of the automotive industry’s performance.

                                           Apr thru Feb   Apr thru March    Apr y/y prev  Apr y/y

overall manufacturing:          +0.48%             +0.52%              0.00%         +2.33%

durables manufacturing:       +1.31%            +1.35%             +0.40%         +2.49%

fabricated metals prods:       +2.87%            +2.72%             +2.14%         +4.44%

machinery:                           +1.49%            +1.92%              -0.69%         +4.05%

automotive:                          -1.71%             -1.93%              -4.43%          +3.07%

major appliances:                 -1.43%            -6.77%            -10.44%          +0.03%

aircraft & parts:                   +4.89%           +6.08%             +4.82%           -1.30%

durable mfg ex-automotive:  +1.82%        +1.91%              +1.21%          +2.41%

Comparing the automotive and the durables ex-automotive lines clearly shows both the automotive and April effects – with the latter suggesting the possibility of a production hiccup. Strengthening that interpretation: except for the major appliance category, nearly all the April, 2018-March, 2019 growth rates exceeded the April, 2018-February, 2019 growth rates. Moreover, the April automotive nosedive (which has taken place both on a month-on-month and year-on-year basis), is especially important because vehicle and parts production use so much in the way of machinery and fabricated metals products.

In addition, the safety issues encountered by Boeing may be responsible for the April aviation growth slowdown that may also have contributed to manufacturing’s broader woes that month.

The major appliances figures above continue to stick out like a sore thumb.  But of course, this sector has faced not only metals tariffs, but separate product-specific levies that went into effect in February, 2018.  In addition, America’s slumping housing sector has surely depressed sales and therefore production for reasons having nothing to do with tariffs.

As known by RealityChek regulars, gauging the impact of the tariffs on products from China is much more difficult for numerous reasons. Their role as inputs for manufacturing industries varies. The manufacturing classification system used by Washington for designating the tariff-ed products differs from that used for the Fed production statistics. The levies have been in place for a shorter period of time. And their scope has changed since the first batch went into effect in August.

Further, let’s not forget that the China tariff regime is due for some big changes starting in June, when President Trump has just decided that levies will rise on $200 billion worth of products from the People’s Republic. So the data below may tell us little about what to expect going forward. Here they are nevertheless for the handful of industries for which I’m sure the numbers create a reasonably accurate picture.

                                                      Aug thru Feb    Aug thu March    Aug thru April

overall manufacturing:                     -0.33%                -0.38%                -0.90%

ball bearings:                                  +0.32%                +0.25%               +0.14%

industrial heating equip:                 -2.60%                 -1.85%                -5.69%

farm machinery & equip:             -16.86%               -11.65%              -10.40%

oil/gas drilling platform pts:         +4.59%                +4.35%                +2.68%

Something of an April slump can be seen here, too (which in theory is hard to connect to the China tariffs), except for the farm machinery sector. 

The classic Wall Street sales pitch warns (eventually) that “Past performance is no guarantee of future results.” So especially considering the higher China tariffs on the way in two weeks, and the possibility that all goods imports from China will be hit by levies at some future date, predicting manufacturing’s growth performance for the rest of this year seems unusually chancy.

Yet the April figures unmistakably show (yet again) that domestic U.S. manufacturing continues to withstand the metals tariffs with ease.

(What’s Left of) Our Economy: Why Tariffs are Off the Hook for Manufacturing’s Slowdown

Tags

aluminum, China, Federal Reserve, industrial production, inflation-adjusted growth, metals, metals-using industries, real growth, steel, tariffs, Trade, Trump, {What's Left of) Our Economy

Here’s all you need to know to recognize that domestic U.S. manufacturing is experiencing some kind of slowdown: Today’s real output numbers from the Federal Reserve showed that production flat-lined on month in March. And that was a significant improvement from the comparable February figure – a 0.37 percent drop!

So do these dreary results mean that tariff fear-mongers are finally right to claim that President Trump’s levies on imports of steel and aluminum, and on a wide range of goods from China are backfiring on American industry? Not according to the internals.

As has been the case for months, the most convincing evidence comes from the metals-using industries. After all, the tariffs affecting their products have been in place longer. (April was the first full month in which they were in effect.) The most relevant industries are easy to identify. And because (with despite numerous exemptions) the tariffs have been virtually worldwide in scope, there’s no need to wonder whether how extensively the steel and aluminum in question are being supplied by an individual country or even group of countries.

The table below presents the inflation-adjusted output changes in major metals-using industries from April through each of the Fed’s last three data months. This format differs from that used in my previous industrial production-related posts because late last month the Fed released a set of revisions going back to 2015. So rather the old and new figures for the previous data month aren’t comparable anymore, and I simply decided to use the new figures going back three months.

                                            April thru Jan.      April thru Feb.     April thru March

overall manufacturing:      +1.20 percent        +0.83 percent         +0.82 percent

durables manufacturing:   +2.05 percent        +2.05 percent          +1.96 percent

fabricated metals prods:   +3.53 percent        +3.08 percent          +2.85 percent

machinery:                       +4.33 percent         +2.24 percent         +2.71 percent

automotive:                      – 2.84 percent         -0.58 percent          -3.06 percent

major appliances:             -1.83 percent          -1.30 percent         -5.62 percent

aircraft and parts:            +5.45 percent         +6.15 percent         +7.43 percent

An overall manufacturing slowdown is apparent from the February and March columns in the top line. And the second line shows that it’s impacted durable goods to a slightly greater extent – a possible signal of a tariff effect since that’s the super-category in which the main metals-using sectors are located.

But tariff-mageddon claims, as has been the case so far, falter upon looking at the details. First, they’re not very consistent with the volatility much of this data display. (E.g., automotive and appliances.) Second, over the past month, the big machinery sector (which provides equipment serving many different markets) has gained momentum. And aircraft and parts-making just keeps growing faster and faster. (Of course, its performance will likely become a drag on manufacturing output going forward because of Boeing’s 737 Max problems and the damage that will harm not only aircraft production, and possibly the industry’s entire supply chain.)

If tariffs are becoming a challenge for these industries, it’s clear that their impact is being swamped by other influences on their performance – especially the distinctive characteristics and status of their individual markets.

Unfortunately, all of the reasons for considering these metals tariffs-related conclusions compelling cut the opposite way when it comes to evaluating the China levies’ impact. The first full month when the earliest were in place was only August. And identifying industries most plausibly affected is difficult both because the tariff list and the industrial production data use different manufacturing classification schemes, and because of the challenge of figuring out where tariff-ed Chinese products play crucial roles in American industry (in the form of parts, components, materials, and other intermediate goods).

As a result, the bottom line remains that only a handful of manufacturing industries look like strong candidates for producing any kind of a China tariff effect, and most of these suffer from one of the above complications. Sharp-eyed RealityChek regulars will notice that I’ve added oil and gas drilling platform parts to the list:

                                            Aug. thru Jan.       Aug. thru Feb.      Aug. thru March

overall manufacturing:      +0.29 percent         -0.08 percent          -0.09 percent

ball bearings:                     +0.27 percent        +0.19 percent         +0.11 percent

industrial heating equip:     -3.61 percent         -3.39 percent         -5.27 percent

farm machinery & equip:  +2.22 percent       -17.14 percent        -11.65 percent

oil/gas drilling platfm pts: +4.74 percent        +4.59 percent         +4.36 percent

The overall manufacturing slowdown is apparent from these statistics, too. But so is a bewildering range of results, along with a small sample size. Whatever problems American industry might now be facing, the case that tariffs bear much, if any, blame has yet to be supported by these or any other data.

(What’s Left of) Our Economy: The New Manufacturing Output Data Belie Tariff Fear-Mongering Yet Again

Tags

aluminum, China, Federal Reserve, imports, industrial production, inflation-adjusted growth, manufacturing, metals, metals-using industries, tariffs, Trade, Trump, {What's Left of) Our Economy

Tariff fear-mongers must have felt a shiver of excitement when today’s new industrial production report came out from the Federal Reserve. For the results showed the inflation-adjusted manufacturing output shrank in January by 0.90 percent – the third sequential decline since the first Trump administration metals tariffs went into effect, and the second since the first round of its China tariffs went into effect. Surely these figures made clear that their claims of the levies hurting American manufacturing were finally coming true! Even better, from their standpoint, revisions were slightly negative.

What a shame to report then that an examination of those always crucial internals demonstrates beyond a reasonable doubt that the trade curbs have had nothing to do with any trouble industry may (or may not) be running into. The evidence? The continuing excellent results registered by metals-using industries, and mixed figures for the much smaller number of sectors where the impact of the first China tariffs (whose first full month was only last August) can reliably be measured.

Here are the changes in real production for the major metals-using industries starting with April – the first full month during which these sectors had to deal with the levies. The table shows the previously reported data for December, the new December data, and the January figures. (All these statistics, it should be noted, are still preliminary.) And they would challenge even the cleverest D.C.-based spin-meister to construct a narrative supporting the popular Twitter hashtag #TariffsHurt:

                                                         old thru Dec.      new thru Dec.       thru Jan.

overall manufacturing:                   +2.02 percent      +2.11 percent   +1.20 percent

durables manufacturing:                +3.31 percent      +3.45 percent   +1.65 percent

fabricated metals products:            +2.05 percent      +2.82 percent   +3.19 percent

machinery:                                     +4.93 percent      +4.38 percent   +3.87 percent

automotive:                                    +3.36 percent      +3.93 percent    -5.18 percent

major appliances:                           +0.08 percent      +3.13 percent    -2.87 percent

aircraft and parts:                           +6.80 percent      +6.14 percent   +6.35 percent

As has been the case almost consistently since the trade curbs on steel and aluminum went into effect, most of the industries relying especially heavily on these metals have actually out-performed the rest of manufacturing. And the struggles indicated here of sectors like automotive and major appliances sure spring from developments distinctive to those sectors – in automotive, major recent volatility (which has also led to major recent revisions) and in appliances, a separate set of levies on large household laundry machines that went into effect in February. The above figures, moreover, even point to volatility in appliance production.

It’s more difficult to gauge the impact of the China tariffs because the first (relatively minor) tranche has been in effect for a much shorter period, and because the levies were based on a system for classifying manufacturing that’s different from the system used in the Fed’s industrial production reports (as well as most major federal government data). So matching up industries is a daunting task, and the more I think about it, the more I’m convinced that even the short list of sectors I presented last month for the December industrial production report contained too many industries where the match-up simply wasn’t close enough to be useful.

Below, therefore, are the only the sectors for which I think it’s possible to draw any firm conclusions, along with the total manufacturing results as a control figure. This highly limited sample shows the latest after-inflation growth rates from August (again, the first full months the first China tariffs were in effect) through December, and through January. And the only consistent trend visible here is volatility.

                                                                       Aug.-Dec.                    Aug.-Jan.

overall manufacturing:                              +1.26 percent              +0.36 percent

ball bearings:                                             +0.02 percent               -0.09 percent

industrial heating equipment:                    +5.19 percent              -3.86 percent

farm machinery and equipment:                +2.50 percent              +9.12 percent

As the next few months pass, it will be possible to examine usefully the China tariffs’ impact on more and more manufacturing sectors. To date, however, the grade is “incomplete” (at best). As for the effects of the steel tariffs, though, isn’t it time to consider putting that #TariffsHurt hashtag way out to pasture?

(What’s Left of) Our Economy: As Trump Tariffs Continue, U.S. Manufacturing Growth Steams Along

Tags

aluminum, China, China tariffs, Federal Reserve, industrial production, inflation-adjusted growth, manufacturing, metals, metals tariffs, metals-using industries, steel, tariffs, Trade, trade war, {What's Left of) Our Economy

Claims keep getting made that President Trump’s tariffs-heavy trade policies have been hammering American manufacturing. (Here’s just one example from as recent as yesterday.) And government, economy-wide data keeps on coming out showing these claims to be complete bunkum.

Today it’s the Federal Reserve’s turn; its new industrial production report (covering December) make plain as day that metals-using manufacturing for the most part continues to out-perform the rest of manufacturing when it comes to inflation-adjusted output even though Trump metals are supposed to be crippling them with skyrocketing cost increases for key inputs. (As the latest producer price results made clear, almost none of that inflation per se can be detected, either.) And although the effects of the China tariffs are more difficult to unpack, what can be presented responsibly fails to reveal discernible damage since the first tranche was imposed.

Below are the numbers for manufacturing overall, and for industry’s main metals-using sectors. They show after-inflation output since April, since the steel and aluminum tariffs went into effect in late March. In addition to the April-through- December percentage changes, you can also see results through November as reported by the Fed last month, along with the revised through-November numbers, to provide a sense of the trends’ momentum. 

                                              old thru Nov       new thru Nov       thru Dec

overall manufacturing:        +0.80 percent       +0.94 percent  +2.02 percent

durables manufacturing:      +1.73 percent      +2.02 percent   +3.31 percent

fabricated metals products:  +1.61 percent      +1.94 percent   +2.05 percent

machinery:                           +5.11 percent      +5.55 percent    +4.93 percent

automotive:                          -1.46 percent       -1.32 percent    +3.36 percent

major appliances:                 -0.88 percent       -0.31 percent    +0.08 percent

aircraft and parts:                +3.27 percent      +5.29 percent     +6.80 percent

As you can see, the only category that’s experienced production growth problems has been the major appliance sector. February was the first full month during which these levies were in place, and since then, price-adjusted output has been off by 1.99 percent (versus a 3.93 percent improvement for manufacturing as a whole). But as the above table demonstrates, even they’ve been making a comeback lately. In cases like aerospace and automotive, the growth pace has quickened significantly, while in machinery, we see some growth fall-off.

Analyzing the impact of the China tariffs is tougher both because they started more recently (in early July), because they’ve been greatly expanded since then, and because Chinese inputs are used in and compete with such a huge number of domestically produced goods. Moreover, the government’s list of these levies uses a different industry classification system than the Fed uses for industrial production, and exact match-ups don’t abound.

So the below table, showing real output changes for some products tariff-ed since July, is a best guess, with the exception of farm machinery and equipment, and ball bearings. But more power to you if you see China tariff-related damage here.

overall manufacturing:                            +1.72 percent

aircraft engines and engine parts:           +5.42 percent

industrial heating equipment:                 +0.14 percent

oil and gas drilling platform parts:         +2.21 percent

farm machinery and equipment:             +3.29 percent

ball bearings:                                           -0.17 percent

“Tomorrow, tomorrow, I love ya, tomorrow. You’re always a day away!” is a well-known Broadway lyric. As the new Fed industrial production figures demonstrate, “tomorrow” is also the best hope for the tariff alarmists to show that the trade curbs are in anyway undermining the American economy on net.

Making News: Back on National Radio Tonight with a Trade Wars Update…& More!

Tags

Breitbart News Tonight, Breitbart.com, China, economy, Gordon G. Chang, industrial production, John Cartney, Making News, manufacturing, tariffs, Thaddeus McCotter, The John Batchelor Show, Trade, trade war

I’m pleased to announce that I’m scheduled to return tonight to John Batchelor’s nationally syndicated radio show tonight.  During the segment, slated to start at 9:45 PM EST, I’ll be helping John, co-host Gordon G. Chang, and former Michigan Republican Congressman Thaddeus McCotter analyse the latest developments in the U.S. trade conflict with China.

Listen live on-line at this link. And as usual, I’ll be posting a link to the podcast as soon as one’s available.

Speaking of podcasts, last Thursday night, I appeared again on Breitbart News Tonight to talk about just about everything under the sun having to do with the state of the U.S. economy. To listen to the interview, click here and scroll down to the December 13 entries, where you’ll see my name.

Last Friday, moreover, John Carney of Breitbart.com spotlighted my post on what the new Federal Reserve industrial production numbers told us about the impact of President Trump’s tariffs on domestic manufacturing output.  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: New U.S. Manufacturing Production Data (Again) Mock Tariff Fear-Mongering

Tags

aluminum, China, durable goods, Federal Reserve, industrial production, inflation-adjusted output, manufacturing, metals, metals tariffs, metals-using industries, non-durable goods, steel, tariffs, Trade, {What's Left of) Our Economy

If you’re among the legions of tariff alarmists in America’s intertwined political, business, and media establishments, this morning’s industrial production report (for November) from the Federal Reserve turned out to be an especially cruel hoax. It’s overall results seem to reveal that President Trump’s levies on imports of steel, aluminum, and on products from China are (finally!) producing major economic data showing damage to domestic manufacturing in the form of inflation-adjusted output. But the critical details (once again) show absolutely noting of the kind.

Let’s start with the metals tariffs – which started to be imposed in late March – and the performance of industries that make heavy use of them. If the Trump tariffs are indeed going to bite, then you’d think that some evidence would be visible eight months later. But the new Fed data make clear that this evidence still hasn’t appeared. As with last month’s post on the industrial production statistics, I’m including small household appliances. I’m still increasingly convinced that they’re now so small and consequently use little in the way of steel and aluminum, they do incorporate lots of electronics – so in principle they reveal something about the China tariffs’ impact.

The data start with April (the first full month in which the metals tariffs were in place) and go through November. I’m presenting the previously reported and revised October results in order to provide a sense of the trends’ momentum. I’m also adding aircraft and parts, which I carelessly left out last month; therefore, the original October results aren’t available.

                                                    old thru Oct      new thru Oct         thru Nov

overall manufacturing:              +1.30 percent    +0.78 percent     +0.80 percent

durables manufacturing:           +1.93 percent    +1.55 percent     +1.73 percent

fabricated metals products:      +2.06 percent     +1.67 percent     +1.61 percent

machinery:                               +5.09 percent      +4.54 percent    +5.11 percent

automotive:                               -2.42 percent      -1.74 percent     -1.46 percent

small appliances:                      -6.62 percent       -8.10 percent   -10.86 percent

major appliances:                     -3.32 percent       -3.24 percent     -0.88 percent

aircraft & parts:                        not available       +3.54 percent    +3.27 percent

The good news for tariff alarmists is the overall real manufacturing growth slowdown apparent from this table, led by a significant downward revision for October. But look more closely and there’s no reason to blame the metals tariffs at all.

For if they were the main culprit, why would the slowdown be so much more modest in the durable goods sector – where so many of the biggest metals-using industries are found? Why would heavy metals-using machinery still be outperforming big-time? Why would another metals-reliant giant, automotive, be demonstrating such impressive catch-up? And how could the major appliances sector – which has also been hit with a product-specific tariff on large home laundry machines – be making up even more ground?

The details will also prove disappointing to China tariff alarmists. Starting in July, levies on $250 billion worth of imports from the People’s Republic. And so many U.S. domestically manufactured products contain parts and components and other inputs from China that it’s been easy to sell the contention that the higher prices for American industry resulting from the tariffs will backfire on the entire manufacturing sector.

Yet once more, the Fed industrial production data reveal these claims to be “truthy” (i.e, something that pushers want to believe is the case) rather than “true.” As noted last month, Chinese inputs are so widely used that I can’t perform a deep statistical dive for now. But the main manufacturing aggregates don’t bear out the “tariff-mageddon” story for the China levies, either.

As the numbers in the first table for smaller appliances indicate, there’s a case that they’ve been damaged by the China tariffs, since they surely use lots of Made in China electronic components. But the industrial production data writ large show nothing of the kind. The figures below show the changes in real output for manufacturing generally, and for its two main super-sectors, for the five months since the first China tariffs were imposed (during the first week of July) and for the five months to and including July.

                                                      March-July                       July-Nov

overall manufacturing:               +0.87 percent                 +0.52 percent

durable goods:                            +0.13 percent                 +2.01 percent

non-durable goods:                     +1.65 percent                  -0.99 percent

The obvious conclusion: Unless Chinese inputs are highly concentrated in the non-durable goods sector (and there’s no justification for this assumption), there’s a problem in non-durable goods stemming from something (or things) other than the China tariffs.  ‘

Luckily for the tariff alarmists, however, there’s no sign that they’ll be held accountable by the institution that’s supposed to be democracy’s watchdog:  the Mainstream Media.  So for the foreseeable future, in terms of what the public will be reading and hearing on trade policy, expect gloom to keep springing eternal. 

Making News: New National Radio Podcast on Tariffs and China Trade Now On-Line…& More!

Tags

Breitbart News Tonight, Breitbart.com, China, Federal Reserve, industrial production, IndustryToday.com, Jobs, John Carney, Making News, manufacturing, tariffs, Trade, tradewars, Trump, wages

Once again I got a sort-of-last-minute request last night from Breitbart News Tonight to appear on that radio show.  But thanks to the invention of the podcast, you can listen to the interview on-line.  So click here (the segment with my name on it is right near the top), for a great discussion about how President Trump’s tariffs are (and aren’t) impacting the American economy and its manufacturing sector, and about whether a truce in the U.S.-China trade war is in the offing.

In addition, it was great to be quoted yesterday on the trade implications of the latest Federal Reserve industrial production data by Breitbart‘s John Carney – the only other analyst I’ve seen who has consistently been reporting on the message being sent by official U.S economic data on the tariffs’ actual impact on the U.S. economy.

Finally, IndustryToday.com this last week re-published two recent RealityChek posts – on how supposedly tariff-vulnerable metals-using industries generally have been claiming even more job openings than the rest of the manufacturing sector; and on a possible big new reason why manufacturing wages have lagged so far beyond job creation.

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

 

(What’s Left of) Our Economy: More Evidence that Trump’s Metals Tariffs are Winning

Tags

aluminum, Federal Reserve, industrial production, inflation-adjusted output, manufacturing, steel, tariffs, Trump, {What's Left of) Our Economy

One big and neglected result from the Trump administration’s metals tariffs comes ssthrough loud and clear from going deep into the weeds of yesterday’s report on September industrial production from the Federal Reserve: American steel production is growing robustly – refuting charges (see., e.g., here and here) that the steel makers would simply sit on their hands and enjoy bigger profits – as is the output of primary aluminum.

Here are the numbers for inflation-adjusted production of steel – including its major sub-sectors – starting in April (because the tariffs began to be imposed in late March) through September, and year-on-year for September:

                                                         April thru Sept            Sept year-on-year

overall iron & steel mill products:   +3.84 percent               +7.54 percent

raw steel:                                          +1.60 percent               +8.30 percent

construction steel:                           +10.73 percent             +14.50 percent

consumer durable steel:                     -3.59 percent                -6.44 percent

can and closure steel:                      +42.48 percent             +15.86 percent

equipment steel:                              +16.87 percent              +14.44 percent

miscellaneous steel:                           -1.47 percent                +5.44 percent

The results are particularly impressive when compared with inflation-adjusted production in the rest of manufacturing during this period:

                                                         April thru Sept             Sept year-on-year

overall manufacturing:                     +0.77 percent                +3.85 percent

The aluminum industry results are decidedly more mixed, because of domestic aluminum companies’ significant reliance on imported primary aluminum and alumina both for their smelting and for other further processing operations. But the primary production jump is impressive. And on a year-on-year basis, the rest of the industry is still performing respectably.

                                                         April thru Sept            Sept year-on-year

overall aluminum:                            +1.86 percent                  +4.89 percent

primary aluminum production:      +13.84 percent                 +47.92 percent

secondary smelting & alloying:      -0.34 percent                     +2.75 percent

misc aluminum materials:               -2.31 percent                     +0.52 percent

aluminum extruded product:           -2.01 percent                      +4.03 percent

Combine these statistics with the strong output recorded for metals-using industries – which are widely reported to be hammered by higher input prices – and a clear picture emerges of a metals tariff policy definitely deserving the description of “winning.” Maybe one day their news media will let Americans in on the story.

(What’s Left of) Our Economy: Despite Tariff Alarmism, “Victim Industries'” Manufacturing Output Remains Strong

Tags

China, Federal Reserve, industrial production, inflation-adjusted output, manufacturing, metals-using industries, tariffs, Trump, {What's Left of) Our Economy

The Federal Reserve’s new (September) industrial production figures contained the latest evidence that President Trump’s metals tariffs are showing no sign of harming America’s metals-using industries. Indeed, on top of their inflation-adjusted output generally remaining impressive compared with that of the rest of domestic manufacturing, industries that had apparently paid a high price for the levies (chiefly major appliances, where separate safeguard tariffs on household laundry equipment have been in place since February) have made up lost ground dramatically.

Moreover, although they began only in July, the industrial production figures so far show no reason to believe that Mr. Trump’s China tariffs are undermining domestic industry, either.

Here’s how major metals-using industries have done in terms of generating real growth between August and September (according to this morning’s preliminary data) – along with the numbers for manufacturing as a whole, and durable goods as a whole (the super-category in which the heaviest metals users tend to be found). This table also includes the previously released and new July-August results.

                                            Old July-Aug       New July-Aug           Aug-Sept

overall manufacturing:       +0.28 percent       +0.29 percent         +0.24 percent

durable goods:                  +1.01 percent         +1.08 percent         +0.59 percent

fabricated metals products: +0.22 percent       +0.51 percent        +0.05 percent

machinery:                          +1.07 percent       +1.87 percent        +0.88 percent

automotive:                         +4.02 percent       +4.27 percent        +1.70 percent

small appliances:                 +0.81 percent      +1.98 percent        +1.34 percent

major appliances:                 -2.76 percent        -1.58 percent        +3.26 percent

As with domestic manufacturing as a whole, the metals-users experienced a sequential production slowdown in September – and in fact one that exceeded that for manufacturing overall. But this slowdown came right after a July-August performance that was much stronger than for the rest of industry, and where revisions were much more positive.

The longer-term statistics tell much the same story – including about a big comeback for appliance production. Here are the real output data since April (used as the baseline since the metals tariffs were imposed beginning in late March):

                                               old thru Aug       new thru Aug       thru Sept

overall manufacturing:          0.54 percent       +0.52 percent    +0.76 percent

durables manufacturing:     +0.48 percent       +0.82 percent    +1.41 percent

fabricated metals products: +0.79 percent       +1.22 percent    +1.28 percent

machinery:                           +0.09 percent      +1.93 percent    +2.84 percent

automotive:                         -0.63 percent        -0.30 percent    +1.39 percent

small appliances:                 -5.33 percent        -2.54 percent     -1.23 percent

major appliances”                -5.25 percent        -4.00 percent     -0.87 percent

Finally, although the China tariffs are much more recent, reports are already appearing claiming that they, too, are backfiring on American industry. Yet just as with the metals tariffs, the official data refute these claims. Here are the real output figures for manufacturing as a whole, and its two super-sectors, for the two months preceding the first tariffs on imports from China and for the two months following them:

                                                         May-July                             July-Sept

overall manufacturing:                 +1.15 percent                      +0.54 percent

durable goods:                              +1.28 percent                      +1.68 percent

non-durable goods:                       +1.01 percent                       -0.63 percent

True, a slowdown is apparent. But it’s entirely due to weak performance in the non-durable goods sector. And it’s likely that this setback owes at least partly to Hurricane Florence, since among the worst results were those in the textiles sector, which boasts a large presence in the Southeastern United States.

As always, the data going forward could change the tariff-impact picture significantly. It will need to for the narrative to start finally matching up with the reality.