(What’s Left of) Our Economy: Springtime Blahs for U.S. Manufacturing Jobs

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aerospace, aircraft, appliances, automation, automotive, Boeing, CCP Virus, coronavirus, COVID 19, Employment, fabricated metal products, Jobs, Labor Departent, machinery, manufacturing, masks, metals tariffs, non-farm business, non-farm payrolls, pharmaceuticals, PPE, productivity, protective gear, regulatory policy, tariffs, tax policy, vaccines, Wuhan virus, {What's Left of) Our Economy

In contrast to the mixed set of signals I saw being given off by last month’s official monthly U.S. jobs report (for April), today’s May figures are pretty clearly indicating that manufacturing hiring is in a weak patch. In fact, the patch has been weak enough to turn the sector from a national employment creation leader to a laggard. Just as important, the short-term outlook at least seems somewhat dimmer than it had been.

The main reason for confusion over the previous data had to do with the disconnect between the automotive-heavy losses of April (which accounted for more than all of that month’s initially reported 18,000 net job decrease) and the positive revisions for the preceding months. Another very encouraging sign – the second straight month of strong jobs gains for the machinery sector, whose products are used widely not only in the rest of manufacturing, but in other major parts of the economy like agriculture and construction.

May’s results were almost a mirror image – and not in a good way.

For example, whereas in April, the 27,000 sequential automotive job losses exceeded total manufacturing job loss of 18,000 (leaving the rest of industry’s hiring performance pretty subdued, to be sure), in May, automotive payrolls rose by 24,800. But overall manufacturing job gains totaled only 23,000 – so the rest of the sector shed workers on net.

In addition, revisions are now negative. April’s manufacturing employment is now judged to have fallen by 32,000 month-to-month, not 18,000. That’s largely because that month’s automotive layoffs were much bigger than first reported – 37,700 rather than 27,000. Even March’s very good upwardly revised monthly hiring surge of 54,000 has now been revised down again to 51,000.

As for machinery, that crucial industry lost 4,700 jobs on net in May – its worst results by far since April, 2020 – at the depths of the CCP Virus-induced downturn and the first negative number since January. Moreover, this April’s 3,700 monthly jobs increase has now been revised down to 1,900, and March’s last upgraded 5,400 figure is now pegged at only 3,500.

In all, manufacturing has now regained 876,000 (64.27 percent) of the 1.363 million jobs it lost at the pandemic’s height in the spring of 2020. That’s now well behind the 69.74 percent employment recovery of the private sector and even the 65.88 percent rebound of the total economy (defined as the non-farm sector by the U.S. Labor Department, which compiles and categorizes the data).

The manufacturing sectors with the biggest sequential May jobs gains were the overall transportation equipment sector (where a 9,000 hiring improvement was propped up by the automotive increases), miscellaneous non-durbable good makers (up 4,100), fabricated metals products (up 3,500) miscellaneous durable goods manufacturing (a catch-all category including everything from surgical equipment – like facemasks and other personal protection equipment to gaskets to jewelry – where payrolls were up 3,400), and computer and electronics products and electrical equipment and appliances (up 2,800 each).

The hiring in fabricated metals and appliances was noteworthy given that companies in both industries have been complaining loudly about the pain they’ve been suffering from higher metals prices stemming in part from ongoing U.S. tariffs on these materials. (See, e.g., here and here.)

May’s big manufacturing jobs losers aside from machinery were non-metallic mineral products (down 2,200), paper and paper products (down 2,100), and the big chemicals sector, which is another big supplier of a wide variety of products to the entire economy (down 1,100).

More encouragingly, when it comes to industries closely related to the fight against the pandemic, job creation seems picking up, although the relevant data are one month behind the rest of the jobs figures. Specifically, in the surgical appliances and supplies sector that includes the protective gear, March’s employment increase was unrevised at 900, and hiring accelerated to 1,200 in April – the best monthly performance since September’s 1,600. This sector’s payrolls are now 10,400 (9.89 percnt) higher than in February, 2020 – the last pre-pandemic month.

For pharmaceuticals and medicines overall, March’s 1,500 sequential jobs increase was revised up to 1,600, and April hiring surged to 2,700 – its best performance by far of the CCP Virus period. Its payrolls are up by 12,500 (4.01 percent) since pre-pandemicky February, 2020.

For the pharmaceuticals subsector containing vaccines, March’s initially reported employment increas of 500 is now judged to be 800, and net hiring grew by 1,300 in April – a solid improvement by this industry’s recent standards. As a result, its workforce has now increased by 9,200 (9.30 percent) since February, 2020.

The same unfortunately can’t be said for the aerospace industry, and continuing and even mounting troubles for Boeing presage ongoing woes for the foreseeable future. March’s initially reported 1,800 monthly job loss for aircraft has now been revised for the worse to 1,900, and the sectors workforce fell by another 200 in April. Meanwhile, following sequential March losses in aircraft engines and parts, and in non-engine aircraft parts, employment flatlined in these two sectors combined in April.

Continued strength in the overall recovery of the U.S. economy should provide strong tailwinds for domestic manufacturers and for industry’s jobs figures, and continuing tariffs should help by keep much foreign competition (especially from China) out of the market.

Vaccine production will likely keep expanding – and requiring more workers – as well, mainly to supply immense foreign demand. But the sector is so small that its employment performance can’t move the manufacturing jobs needle much.

Boeing’s problems, however, can be expected to cast a big shadow not only over the big aerospace industry, but over its big domestic supply chain as well. And although the global semiconductor shortage that has hit the automotive sector especially hard may be starting to ease, the damage appears likely to take considerably longer to overcome. Manufacturers face big questions about the future of U.S. tax and regulatory policy, too.

Recently, moreover, some data’s come out pointing to a development that might wind up strengthening domestic industry in toto, but weakening its employment potential, at least in the short run. Labor Department figures show that, from the depths of the pandemic through the first quarter of this year, U.S.-based manufacturing has boosted its labor productivity much faster than the non-farm economy generally — and much faster than it has since its recovery from the last recession.  In other words, manufacturers lately been improving their ability to turn out product more than they’ve increased hiring. 

Whether this is a secular change or whether industry will revert to its recent mean is anyone’s guess. Also highly uncertain is whether better productivity growth (including of course more use of labor-saving technologies) will wind up destroying jobs on net, or increasing them by supercharging production. So far history seems to teach that such advances are net employment creators, but is that inevitable going forward? And is it inevitable for manufacturing specifically? All I can say is “Stay tuned” and “Be patient.”          

(What’s Left of) Our Economy: The Big Missing Reason for the Big Jobs Miss

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Anthony S. Fauci, automation, Biden, Build Back Better, CCP Virus, CDC, Centers for Disease Control and Prevention, child care, children, coronavirus, COVID 19, FDR, Franklin D. Roosevelt, immunity, Jobs, jobs report, lockdowns, New Deal, parents, productivity, reopening, school closings, skills, skills gap, teachers, unemployment, unemployment benefits, vaccinations, Wuhan virus, {What's Left of) Our Economy

As reported widely, the big miss marking last Friday’s official monthly U.S. jobs report (for April) ignited a heated debate among politicians, economists, and many others over why the U.S. economy created so much less new employment that month (266,000 net new positions overall) than generally estimated (in the million neighborhood). At the heart of this debate: Do the many positions employers consistently say they’re struggling to fill amid a continuingly high jobless rate mean that the enhanced unemployment benefits offered throughout the pandemic are discouraging Americans from returning to the workplace?

What I’m not seeing, however, is anyone asking whether this is the right debate. It’s increasingly obvious to me that it’s not.

It’s easy to see why those who answer yes are viewing the issue far too narrowly. Surely some unemployed workers are content to stay at home because they’re currently making more from jobless payments than they were making from their previous employer. That should be clear from the number of businesses raising wages to fill the shortages they’re experiencing. (I’m not saying that these raises are or aren’t long overdue or otherwise deserved; simply that the higher pay and other incentives employers are offering can only be interpreted as companies recognizing that the enhanced benefits have, to a degree, increased the relative attraction of remaining on the employment sidelines versus reentering the job market.)

At the same time, is it reasonable to ignore all the other major reasons for this big labor market anomaly? Like ongoing fears of catching the CCP Virus at the workplace, or the need to stay home with school-age children forced to learn remotely? And don’t forget all the uncertainties created by the sudden stop-start nature of the virus-era lockdowns on the economy.

Yes, a rapid U.S. reopening is taking place now. But all over the world, infection surges are producing new economic curbs. Can you blame workers for wondering whether shortly after they leave the unemployment and benefits rolls, their new workplace will need to close, or cut back on its operations, leaving them in the lurch while they either seek other jobs or file for new benefits?

It’s easy to see that all of these developments and circumstances and uncertainties and outright fears are keeping U.S. labor seemingly scarce. You can also add to the list the likelihood of growing skills mismatches in the American economy – that is, the numbers of jobs requiring more or different skills outgrowing the number of workers possessing these skills, and the numbers of companies replacing low-skill jobs with automation of some kind. Not that the resulting mismatches inevitably will be with the nation forever, or even long term. But they’re unmistakably present now.

So maybe the problem is simply too complicated for government to address? Or we’ll simply need to wait until a stable post-CCP Virus normality returns and labor markets start clearing as usual? It seems reasonable that the purely skills-based mismatches will defy ready solutions – unless America’s education system suddenly gets a lot better at preparing students for the economy they’ll be facing, and businesses get more serious about training and retraining workers, and turn  away from needlessly insisting on lofty credentials for jobs that don’t require anything close.

It’s also possible – though that’s the most I’m willing to say – that spreading automation will eventually help businesses become so much more productive that they’ll be able to turn out more products and services, and that this very success will generate all sorts of new jobs whose appearance can’t be predicted with any precision now. (My reservations stem from concerns that the newest forms of automation, especially artificial intelligence and super-sophisticated robotics, are qualitatively more capable of displacing many more kinds of labor than previous technological breakthroughs.)

As long as the federal government and the states remain willing to provide generous unemployment benefits (and other supports), the resulting situation would at least keep most of the jobless adequately fed, clothed, and housed. That’s a big “if,” though, for reasons economic (e.g., maybe Washington can’t keep borrowing and spending massively much longer?) and social and cultural (e.g., maybe ever longer term unemployment will start to produce more in the way of pathological behavior like drug abuse, violent crime, and worse classroom performance from students from families on the dole?).

Consequently, the more progress can be made returning the unemployed to work, the better, and however difficult the challenge of eliminating the purely or largely skills-based mismatches, Americans and their leaders shouldn’t overlook where policy can make a big difference. And the above analysis indicates that one big difference can be made by the U.S. government, and especially its public health authorities.

Specifically, they need finally to stop their CCP Virus alarmism and energetically spread the word that due to a combination of high and mounting degrees of various kinds of immunity, mass vaccinations, and the highly varying nature of the virus’ infectiousness and lethality, normality is unquestionably returning. Further, and crucially, although certain groups of Americans – like the elderly, and those with certain underlying medical conditions – are still too vulnerable and must be protected with special measures, the Biden administration and its health experts should acknowledge that nearly all others can safely return to normal activities because the already low odds of even getting the disease, much less suffering significantly from it, have now plunged to rock bottom.

In other words, Washington should announce that work places are safe to return to, bricks and mortars businesses are now safe to patronize, in-person schooling is just fine for both students and teachers and administrative staff alike, (thus solving the childcare dilemma), and that lockdowns have become a thing of the past.

Instead, of course, you’ve got a Centers for Disease Control and Prevention (CDC) that seems stuck in hyper- (and increasingly unscientific) caution territory, not to mention decimating its own message about vaccines’ effectivness by admitting almost no behavior payoff whatever; and a President and leading figures of his own party continuing to wear facemasks even in settings that “the science” had made crystal clear are as safe as they can be for the fully vaccinated.

To top if off, the President’s chief medical adviser, Dr. Anthony S. Fauci, has just taken pains to speculate that Americans may start wearing facemasks to guard against all sorts of respiratory diseases on a seasonal basis. Given this administration’s record so far, it doesn’t seem all that far-fetched to worry that new CDC guidelines along these lines, plus recommendations to resume some forms of social distancing, and even new business curbs, could quickly follow if this kind of Chicken Little-ism isn’t stopped. For now, though, no wonder so many Americans are still scared stiff of the virus.

It’s becoming more and more common to compare President Biden and his ambitious plans for “Building the U.S. Economy Back Better” with Franklin D. Roosevelt and his New Deal programs.  (See, e.g., here and here.) But it’s hard to imagine Mr. Biden succeeding to any lasting degree if his CCP Virus policy doesn’t start reflecting one of FDR’s most and most deservedly famous insights: “[T]he only thing we have to fear is fear itself.”

(What’s Left of) Our Economy: Strong Crosswinds Roil the New U.S. Manufacturing Jobs Figures

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aerospace, air travel, automotive, CCP Virus, chemicals, coronavirus, COVID 19, Employment, fabricated metals products, infrastructure, Jobs, machinery, manufacturing, miscellaneous durable goods, miscellaneous non-durable goods, non-farm jobs, pharmaceuticals, PPE, private sector, regulation, semiconductor shortage, semiconductors, stimulus package, taxes, vaccines, wood products, Wuhan virus, {What's Left of) Our Economy

It’s tough to imagine a U.S. official monthly jobs report giving off so many conflicting signals about the health of domestic manufacturing and its outlook than the one that came out this morning (for April).

On the one hand, the sector’s 18,000 jobs loss was its worst monthly performance since the identical January setback. On the other hand, the problem was heavily concentrated in the automotive sector, which has been forced to cut back production due to the ongoing global semiconductor shortage. On the other, other hand (!), this shortage is unlikely to ease for many months. On still another hand, the revisions were strong. And some key manufacturing industries continued a recent pattern of solid results. At the same time, even removing the automotive results would still leave the rest of domestic manufacturing’s April employment performance decidedly weak.

I could go on in this vein – and will below.

The decisive automotive/semiconductor effect on the April manufacturing figures becomes clear enough upon realizing that this sector’s 27,000 sequential employment loss was considerably greater than manufacturing’s total on-month job decline. Nonetheless, even had automotive held its employment line, the consequent 9,000 manufacturing job increase would have been unimpressive at very best.

And yet there are those revisions. March’s initially reported 53,000 monthly manufacturing payroll increases – the best such figure since last September’s 55,000 – are now pegged at 54,000. Even better, February’s initially downgraded (from 21,000 to 18,000) monthly employment increase has now been revised all the way up to 35,000.

As a result, domestic industry has now regained 63.83 percent (or 870,000) of the 1.363 million jobs it shed during the height of the CCP Virus pandemic in spring, 2020. It’s still behind the private sector overall (which has recovered 66.88 percent of its pandemic peak employment loss), but still ahead of the overall economy’s (called the non-farm sector by the Labor Department, which issues the monthly jobs reports) 63.26 percent.

The only major April manufacturing jobs loser other than automotive was the small wood products sector (7,200). The big fabricated metals products industry saw employment fall by 2,900 on month in April, but the drop followed a large March gain that’s been downwardly revised but still stands at a strong 10,400.

The machinery numbers were downright encouraging, and that matters because as I keep reminding, this subsector’s products are used not only throughout the rest of domestic manufacturing, but in other important parts of the economy like construction and agriculture. Its April employment boost of 3,700 followed March job creation that was upgraded strongly to 5,400.

In the big miscellaneous durable goods sector, a catchall category that includes everything from surgical equipment and supplies (like personal healthcare protection equipment – PPE – more on which later) to jewelry to gaskets and fasteners to musical instruments, payrolls jumped by 12,600 – their best monthly performance since its 15,300 advance last July.

And two other significant manufacturing employers –miscellaneous non-durable goods and the big chemicals sectors (whose output is also used all over the economy) – each generated enjoyed healthy payrolls increases of 4,300 in April.

Even the industries closely related to the fight against the CCP Virus, whose employment performance since the pandemic’s arrival generally have disappointed, showed some signs of job-creation life in April.

The overall pharmaceutical industry added 1,500 jobs on month in March (the latest available figures) and Februay’s improvement remains a strong 1,700. Since the last pre-pandemic month (February, 2020), this sector’s payrolls have grown by 3.11 percent.

Hiring slowed in the pharmaceuticals subsector containing vaccines – from 1,300 sequentially in February (unchanged from the first estimate) to 500 in March (also the latest available figures). But these companies’ employment is still 6.77 percent higher than in that last pre-pandemic month of February, 2020.

The employment signals were mixed in the manufacturing category containing PPE goods like facemasks, gloves, and medical gowns. Monthly job creation in February was downgraded from zero to a loss of 100, but March’s results (also the most recent) came in at 900, and this sector now employs 8.75 percent more workers than in February, 2020.

In an aerospace industry troubled for years by Boeing’s safety woes, the recent jobs figures are literally all over the place. The latest (March) results show that payrolls for aircraft fell month-to-month in March by 1,800 – surely reflecting the continuing virus-generated slump in air travel. But February’s upward revisions were nothing less than stunning – skyrocketing from a jump of 1,000 to one of 11,700. Fluctuations – though more modest – were also evident in aircraft engines and parts, and non-engine aircraft parts.

Yet as confusing as the new manufacturing jobs figures have been, the future seems just as cloudy. Optimism remains justified by developments like the enormous amounts of stimulus still pouring into the U.S. economy, by the apparent certainty that a major injection of infratructure spending is (finally) on the way, and by the continuing reopening of the economy spurred by vaccinations and less consumer caution.

Even so, the semiconductor shortage is not only here to stay for some time, but has affected many other industries other than automotive. The rate of U.S. vaccinations is slowing and the virus – including the new variants – appears likely to stage something of a comeback when the weather cools again in the fall. Air travel may never recover to pre-virus levels, which will harm not only the aerospace industry per se, but its vast domestic supply chain. And higher taxes and many more regulations could well hit U.S.-based manufacturers – at least until the Congressional elections of 2022.

On balance, I’d still bet on a bright future for domestic industry – mainly because all the sentiment surveys show that manufacturers themselves are full of confidence, and because President Biden has kept in place all the Trump China and metals tariffs that have priced much foreign competition out of the U.S. market. But I’m far from willing to bet the ranch.

(What’s Left of) Our Economy: March U.S. Manufacturing Job Gains Lagged – For a Good Reason

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aerospace, aircraft, aircraft engines, aircraft parts, American Jobs Plan, automotive, Biden, Build Back Better, CCP Virus, coronavirus, COVID 19, Donald Trump, Employment, fabricated metal products, Jobs, Labor Department, lockdowns, machinery, manufacturing, non-farm jobs, pharmaceuticals, PPE, recession, recovery, regulation, semiconductor shortage, semiconductors, tariffs, taxes, Trade, travel services, vaccines, Wuhan virus, {What's Left of) Our Economy

This morning’s figures from the Labor Department show that U.S. domestic manufacturing was a bit of a jobs creation laggard in March – and that was good news. The reason? The employment gains for the rest of the economy were so enormous.

This latest monthly U.S. jobs report showed that non-farm payrolls (the definition of the U.S. jobs universe used by the Labor Department, which tracks these data), rose by 0.64 percent in March – to 144.210 million. Job-creation in the private sector advanced at a virtually identical rate.

Payrolls in manufacturing were up by a lower 0.43 percent – to 12.284 million. But they still increased by 53,000 – their best performance since September’s 55,000. It’s also possible that hiring in the automotive sector was held down by a global shortage of semiconductors – which has led to production cutbacks and even some layoffs.

The only disappointment in the new manufacturing jobs numbers concerned revisions – which were mostly negative. February’s initially reported 21,000 net employment gain is now estimated at 18,000. January’s 14,000 job loss (already downgraded from an initially judged 10,000) is now pegged at a still greater 18,000. But December’s improvement was upwardly revised again – from 34,000 to 35,000.

As a result, manufacturing has now regained 63.83 percent (870,000) of the 1.363 million jobs the sector shed during the peak CCP Virus lockdowns period of last March and April. That’s fewer relatively speaking than the recovery in private sector employment – 66.88 percent (14.172 million) of the 21.191 million jobs it lost during that period.

But because of continuing weakness in the public sector – which has recovered just 66.42 percent of its 22.362 million job loss last spring – manufacturing’s payrolls’ rebound is still ahead of the entire economy’s. In fact, manufacturing jobs now account for a higher (8.52 percent) of total non-farm employment than during the last full pre-pandemic data month (8.39 percent in February, 2020).

The biggest manufacturing jobs winners in March? Far and away the champ was the big fabricated metals products industry, which expanded employment by 13,700 – more than a quarter of the manufacturing total. Next came two smallish sectors – miscellaneous non-durable goods and printing and related support activities (up 7,400 and 5,900, respectively). Encouragingly, jobs increased by 3,500 in the big machinery sector – whose products are used throughout not only the rest of manufacturing but the entire economy.

The worst performers were transportation equipment – whose 3,000 lost March jobs included 1,000 in the automotive sector, which has been forced into production cutbacks and some layoffs due to the global semiconductor shortage – and furniture (down 1,300).

Unfortunately, these latest figures indicate that employment in many CCP Virus-fighting goods continues to lag. To be sure, their payrolls seem to be up from the last pre-pandemic levels whereas overall manufacturing jobs are down (by 4.02 percent). But given the nature of the emergency, and the shortages it revealed, it’s surprising they’re not higher still.

The relevant numbers only go through February, and in the broad pharmaceuticals sector, employment rose by 1,600 sequentially. And January’s initially reported 700 job loss has been upgraded to a decrease of only 100. But the sector’s payrolls have grown by a mere 2.60 percent since that last pre-pandemic month of February, 2020.

The performance of the pharmaceuticals subsector containing vaccines was considerably better. February payrolls expanded by 1,300 sequentially, and January’s gains are now estimated at 500, not 100. As a result, this vaccine-related sector’s employment levels are now 6.23 percent higher than in February, 2020.

The story, however, has been more discouraging lately in the manufacturing category containing personal healthcare-related protection devices (PPE) like facemasks, gloves, and medical gowns. Payrolls were flat on month in February, and the initially reported January job loss of 800 was only upgraded to a decline of 700. Still, payrolls in this sector have climbed by 7.98 percent since February, 2020.

Interestingly, despite the rebounding orders for Boeing’s popular but previously grounded 737 Max jetliner, the recovery of national and global travel, and the resumption of deliveries of its also-troubled 787 Dreamliner, none of these positive developments has shown up in the aerospace jobs numbers.

For example, aircraft employment in February (also the latest available figures) grew by only 1,000 on month and not only remains down 10.66 percent on year, but substantially lower than all of last year’s safety crisis- and the worst of the CCP Virus-plagued months. Similar trends hold for aircraft engines and engine parts, and non-engine aircraft parts.

The outlook for domestic manufacturing job creation still seem bright, as vaccinations are being administered rapidly, reopenings are spreading, igniting renewed overall economic activity, Boeing does seem to be emerging from its safety and manufacturing-related troubles, and the high, sweeping Trump tariffs keep pricing many Chinese goods out of the U.S. market, thereby creating new opportunities for American producers.

But that global semiconductor shortage, which will eventually affect much more than automotive output, may not end until late next year. It’s tough to know the overall impact of the Biden administration’s American Jobs Plan and other Build Back Better virus recovery proposals on the one hand, and the tax increases proposed to pay for them on the other, as well as the new regulations that will be involved – assuming even that they pass Congress reasonably intact. And vaccines production won’t be booming forever.

So no one concerned about domestic manufacturing’s health and prospects has any excuse not to peruse carefully all the industry-related data and news that are in store in the weeks and months ahead.

Im-Politic: A Trifecta (& Not in a Good Way) for the Washington Post

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alliances, allies, benefits, contract workers, education, foreign policy, geopolitics, globalism, globalization, Jobs, Mainstream Media, manufacturing, media bias, MSM, national security, NATO, North Atlantic Treat Organization, remote learning, reopening, schools, teachers, teachers unions, temporary jobs, Trade, wages, Washington Post, Zoom

At 11:30 yesterday morning, when I sat down for my typical Sunday brunch at home (where else these days?), I had no idea what I’d blog about today. At 11:35, after perusing the Washington Post Outlook section, I had no fewer than three ideas, each of which focused on an article simultaneously whacko and emblematic of key Mainstream Media and broader establishment biases. Ultimately, I decided that they were all so inane and representative that a single post briefly examining each would suffice to get the message across.

First catching my eye was a proposal by Seton Hall University political scientist Sara Bjerg Moller that the North Atlantic Treaty Organization (NATO) “reorienting” its focus to add countering the rise of China to its list of missions, and even designating it the top priority. One obvious retort is that the European members of this alliance binding America’s own national security to that of the continent is that during the Cold War, when they readily acknowledged the threat posed by the old Soviet Union, these European members collectively never even mustered the will to provide adequately for their own defense even when they became wealthy enough to create such militaries.

They preferred to free ride on the United States instead – which perversely enabled this behavior by sticking hundreds of thousands of its own troops – and their dependents – in harm’s way, smack in the middle of the likeliest Soviet invasion roots. The idea was that since these units couldn’t possibly match the conventional armes of their Soviets and their East European satellite states, once the shooting started, their vulnerability and indeed impending destruction would leave a U.S. President no real choice but to use nuclear weapons to save them. The odds that the conflict would escalate to the all-out nuclear exchange level that would endanger the Soviet homeland itself was suppsed to keep Moscow at bay to begin with. (And if you think this sounds exactly like the U.S. “tripwire” strategy for defending South Korea that I just wrote about here, you’re absolutely right.)

As with the Korea approach, Washington’s NATO Europe strategy needlessly exposes the continental United States to the risk of nuclear attack because wealthy allies skimp on their own defense spending, but that’s not the main problem with Moller’s article. After all, if the Europeans never mobilized enough resources to prevail over a Soviet threat located right on their doorstep – and a Russian threat that presumably still exists today, since the alliance didn’t disband once Communism fell – why would they answer a call to arms against a danger that’s half a world away from them. And even if they agreed with the United States on the imperative of containing Beijing, why wouldn’t they simply repeat their free-riding strategy, which arguably would allow them once more to reap all the benefits of America’s efforts without incurring any of the costs or risks?

But weirdest of all, the author herself admits that Europe remains far from a new anti-China European mindset. In her own words:

“Regrettably, as with Russia [today], Europe is divided over how to deal with China. Many European allies are wary of picking sides in the struggle for influence between the United States and its Asian rival. Some, like Germany, even appear outright resentful at the suggestion that they must choose. German Chancellor Angela Merkel rushed last year to conclude the E.U.-China Comprehensive Agreement on Investment — even though the incoming U.S. national security adviser, Jake Sullivan, had strongly signaled that Europe should wait till Biden’s inauguration.”

Don’t get me wrong: It would be great if the Europeans were ready and willing to stand shoulder to shoulder with the United States against China. But they’re not today, and a heavy burden of proof rests with those arguing that this common front is even remotely possible for the foreseeable future, much less that the United States should spend much time trying to create one. So I’ve got to think that this article was run simply because the relentlessly globalist and therefore alliance-fetishizing Washington Post believes that wishing for (and hyping the prospects of) something can make it so.

The second item is actually a pair of Outlook articles this morning. Their theme – and I could scarcely believe my eyes: Everyone’s overlooking all the advantages that remote learning can create! In other words, for months, national dismay has been growing that conducting classes by Zoom etc at all educational levels has been at best completely inadequate and at worst could permanently scar both the educational attainment and the psyches of the a generation of American students. As warned by none other than President Biden:

“Today, an entire generation of young people is on the brink of being set back up to a year or more in their learning. We are already seeing rising mental health concerns due in part to isolation. Educational disparities that have always existed grow wider each day that our schools remain closed and remote learning isn’t the same for every student.” 

But it’s also clear that the President is loathe to antagonize politically powerful teachers’ unions, which have acted determined to keep schools closed unless a wildly ambitious – not to mention medically unnecessary – set of demands have been met. Largely as a result, all the evidence indicates that a large share of American students still aren’t back in class in person full time (although the hesitation of many parents is partly responsible, too).

It’s just as clear, though, that the Post as an institution, like the rest of the Mainstream Media, is wildly enthusiastic about Mr. Biden. So even though the editorial board has upbraided the unions for their foot-dragging, the Outlook section is run by a different staff and, call me paranoid, I can’t help but suspect that yeserday’s two pieces – by an “author and educator in Boston” and a college professor – aren’t part of an effort to pave the ground for a school re-closing if the CCP Virus shows signs of a comeback.

After all, the articles were dominated by claims to the effect that one author’s Zooming this semester is “light-years better than the last;” that his teaching is “radically improved” since then;  that “if remote learning has been good for one thing, it has closed that gap between authoritative teacher and abiding student”; and presumably best of all, “I used to invest a lot of importance in arbitrary deadlines and make-or-break exams to establish high academic standards. These days, I’ve let go of many of my old notions about penalties for late or missing work.”

It would be one thing – and indeed noteworthy – if these alleged developments were broadly, or increasingly, representative of the American educational scene today.  But the Outlook editors provided no such insights, and if these reported experiences have been exceptions to the rule – as the evidence overwhelmingly concludes – what else could they been trying to accomplish by airing them but soft-pedaling the harm resulting from mass remote teaching?   

The third Outlook item that set me off today was an article by a Washington University (St. Louis) sociologist that included a challenge to the claim that “Manufacturing jobs are the ‘good’ jobs.” The reason? “Unlike in the past, typical pay for these workers is now below the national average” and “the rise of temporary and contract work is a factor….” Moreover, “Not all [such jobs] were offshored or automated, it turns out. Many were just reclassified — downgraded into worse jobs.”

Sure, author Jake Rosenfeld didn’t devote a lot of space to the subject. But he definitely should have devoted more, because what he omitted was critical. For example, it’s true that overall private sector average hourly wages now exceed those for manufacturing, whether you’re talking about the total workforce or just the production/non-supervisory workforce.

But the changeover is pretty recent. According to the U.S. Bureau of Labor Statistics, for the former, it came in 2019; for the latter, in 2006. Moreover, a 2018 Economic Policy Institute study found that although manufacturing’s wage premium (its edge over the rest of the private sector) indeed eroded between the mid-1980s and 2017, the benefits premium actually increased. That’s a finding hard to square with the idea that temporary workers are increasingly dominating manufacturing payrolls.

Further, the idea that offshoring in particular has nothing to do with what growing popularity temps have had with manufacturers can’t withstand serious scrutiny. Or does Rosenfeld believe that super-low-wage pressure from countries like China is unrelated to U.S. workers’ declining bargaining power even when production and jobs aren’t actually sent overseas?

At the same time, efforts to downplay U.S. trade policy’s effects on manufacturing are incredibly convenient for a news organization that, like so many of its peers, enthusiastically backed the pre-Trump administration trade decisions that decimated U.S.-based manufacturing and its employees for decades – and still does.

Despite the expression, “Three strikes, you’re out,” I’m not going to stop reading the Post Outlook section or the rest of the paper. Both are just too influential. But no one should assume that the number of whiffs in yesterday’s paper was limited to three, or that other editions in recent years have been much better. And I do find myself wondering just how many strikes per day I’m going to give this once venerable publication.

(What’s Left of) Our Economy: More Reopening, Not Endless Money, is Now the Best Jobs Strategy

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African Americans, American Rescue Plan, Biden, CCP Virus, coronavirus, COVID 19, Covid relief, education, Employment, Federal Reserve, Hispanics, hotels, Jerome Powell, Jobs, Latinos, leisure and hospitality, lockdowns, recovery, restaurants, shutdown, stay-at-home, stimulus package, unemployment, wages, Wuhan virus, {What's Left of) Our Economy

There’s no doubt that the American jobs market has suffered an out-and-out disaster since it got hit by the CCP Virus and the follow-on lockdowns and other restrictions. There’s also no doubt that many workers and their families are still suffering greatly, and will need government aid to make it to the Other Side, and the Biden administration’s American Rescue Plan legislation that the President will likely sign into law soon will help fill this gap.

Plenty of doubt remains, however, about whether all, or close to all, of the massive funds approved in this measure are actually needed to cure the economy’s remaining employment woes, and one of the main reasons is the nature of the jobs blow that’s been delivered. Because it’s been so heavily concentrated in the country’s leisure and hospitality industries (encompassing eateries and drinking places of all kinds, plus hotels and motels, and entertainment and cultural venues), it’s entirely possible that nowadays, the most effective way to fix the jobs market fastest would be to lift the lockdowns and other mandated curbs that have fallen so hard on sectors that depend on serving in-person customers.

The case for relying on a virus-relief/stimulus package this big, at this stage of the economy’s recovery from its pandemic-induced recession, has been eloquently stated by President Biden and by Federal Reserve Chair Jerome Powell. The former warned just before the legislation passed that the U.S. economy “still has 9.5 million fewer jobs than it had this time last year. And at that rate, it would take two years to get us back on track.”

The latter has stated that he won’t be satisfied that full employment has returned until he sees what one reporter has called “broad-based gains in employment, and not just in the aggregate or at the median.” As a result, the Fed Chair is paying particular attention to (the reporter’s words again) “Black unemployment, wage growth for low-wage workers and labor force participation for those without college degrees, categories that historically have taken longer to recover from downturns than broader metrics.”

But it’s precisely these less fortunate portions of the workforce that would be helped disproportionately – and then some – by focusing on reopening steps that would surely affect the leisure and hospitality industries just as disproportionately.

If you doubt the importance of leisure and hospitality job loss over the last year in terms of overall U.S. jobs loss, here’s what you need to know. Of the 8.068 million positions shed by the country’s private sector between last Februrary (the final month of pre-CCP Virus normality for the American economy), fully 3.451 million have come in the leisure and hospitality industries. That’s nearly 43 percent.

Put differently, during that final normal economic month, leisure and hospitality workers represented just 13.04 percent of all private sector workers. Yet their employment plunge was more than three times as great relatively speaking.

Moreover, leisure and hospitality’s progress in getting back to pre-pandemic square one has been slower than that of the private sector overall. Since the April employment trough, leisure and hospitality has regained 4.955 million of the 8.224 million jobs lost during the worst of the pandemic, or 60.25 percent. For the private sector in toto, 13.267 million of the 21.353 million jobs lost in March and April have come back since – 62.13 percent.

It’s also clear that many of the kinds of workers about which Fed Chair Powell has been most concerned are concentrated in leisure and hospitality. For example, in 2019, (America’s last pre-CCP Virus full year), 13.1 percent of these sectors’ workers were African American versus 12.3 percent for the entire U.S. economy (including government workers at all levels), and 24 percent were Hispanic or Latino versus 17.6 percent for the entire economy.

Leisure and hospitality companies tend to employ Americans with low levels of formal education, too. According to the Labor Department, in 2019, 79.9 percent of the nation’s “first-line supervisors of house-keeping and janitorial workers” 25 years and older lack even an associate’s degree, and 76 percent of their food preparation and service counterparts fall into this category. The shares are even higher for the workers they supervise. Meanwhile, only 51.5 percent of all U.S. workers haven’t taken their education beyond high school.

Not surprisingly, therefore, leisure and hositality jobs pay poorly. In February, 2020, just before the arrivals of the pandemic and the lockdowns, their average hourly wages were only 59.28 percent those of all private sector workers. Last month, this figure had fallen to 57.58 percent. (See Table B-3 here.) 

For most of the pandemic period, the U.S. government at all levels pursued a mitigation strategy that aimed mainly at curbing economic and other forms of human activity across-the-board. Now, even with vaccinations and growing population-wide immunity showing strong signs of bringing the pandemic under control, the Biden administration and the Democratic Congress are just as determined to stimulate the economy that’s still significantly shut down by with an American Rescue Plan that seems just as indiscriminate.

As I’ve been writing (see, e.g., here), it should have been clear since late last spring that the anti-virus fight would have much more effective (and less harmful to the economy and other dimensions of public health) had it targeted protecting especially vulnerable populations. I strongly suspect that, with the fullness of time, it will become just as clear that a stimulus and jobs strategy emphasizing accelerating reopening, and thus aiding sectors and workers hardest hit by the remaining shutdowns, will prove a much more effective employment cure than the indiscriminate spending approach on which Washington has just doubled down.

(What’s Left of) Our Economy: U.S. Manufacturing Hiring Climbs Back on Track

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aerospace, automotive, Biden, Boeing, CCP Virus, China, coronavirus, COVID 19, Donald Trump, gloves, healthcare goods, Jobs, macinery, manufacturing, masks, non-farm jobs, pharmaceuticals, PPE, private sector, semiconductor shortage, semiconductors, tariffs, transportation equipment, vaccines, Wuhan virus, {What's Left of) Our Economy

As this morning’s February official U.S. jobs report was dominated by a reopening-fueled surge in leiure and hospitality payrolls (which accounted for 355,000 of the month’s total 379,000 sequential improvement), American domestic manufacturing’s employment performance resumed chugging along.

U.S.-based industry gained 21,000 jobs on net last month, recovering from its drop off in January (which was revised down from a decline of 10,000 to one of 14,000). December’s initially reported advance, though, was upgraded from 31,000 to 34,000.

The February results mean that manufacturing has now regained 60.45 percent (824,000) of the 1.363 million jobs lost during the peak CCP Virus lockdowns period of last March and April. Consequently, they show that industry’s reemployment pace has continued to reverse its previous performance as the economy’s pandemic recovery leader.

That status now belongs to the overall private sector, which since last April has regenerated 62.61 percent (13.267 million) of the 21.191 million jobs it shed last spring.

Nonetheless, since public sector net hiring remains very weak, manufacturing’s job-creation performance remains well ahead of that of the economy as a whole – which is viewed by the Labor Department, which compiles and releases these statistics, as the “non-farm sector.” Since April, employment in this combined public and private sector is back up by 12.887 million – representing just 57.63 percent of the 22.362 million jobs they lost together in March and April.

Manufacturing’s biggest February jobs winner by far was transportation equipment (up 9,700 – more than 46 percent of industry’s total employment advance). Since payrolls in the very big automotive sector inched up by just 1,000, it’s likely that much of the rest of the increase came in an aerospace sector whose employment troubles are being healed by Boeing’s comeback from safety woes. But because the aerospace (and other non-automotive transportation) jobs figures are reported one month late, we’ll need to wait until the March report to know for sure.

Other major February manufacturing jobs gainers were miscellaneous non-durable goods (up 4,100), machinery (3,800), plastics and rubber products (3,000) and miscellaneous durable goods (2,800). The increases in miscellaneous non-durables and machinery were especially encouraging, as the former category (as detailed below) includes many of the medical goods vital to the anti-virus fight, and the latter’s products are used throughout not only the manufacturing sector, but other big parts of the economy like construction and agriculture.

The biggest February manufacturing jobs losers were food manufacturing (where payrolls fell by a net 3,100), non-metallic mineral products (2,400), and printing and related support activities (1,700).

Given the continuing struggle against the pandemic, the continuing shortages of many vital products like protective gear, and the surge in vaccine production, the jobs performance of healthcare goods once again underwhelmed – though keep in mind that, as with the non-automotive transportation goods categories, the data here are one month behind, too.

In the broad pharmaceuticals sector, employment actually fell by 700 in January. December’s initially reported 2,200 jobs rise has now been upgraded to 2,300, but this big industry’s payrolls are up just 1.89 percent since last Febuary – the last full pre-pandemic data month.

Hiring was stronger in the pharmaceuticals subsector containing vaccines. January employment rose by just 100 sequentially, but the initially reported December 1,100 payrolls increase was revised up to 1,600. As a result, the subsector’s workforce is now 4.55 percent bigger than last February.

The manufacturing category containing personal healthcare-related protection devices (PPE) like facemasks, gloves, and medical gowns has grown employment most impressively of all these healthcare sectors. But it lost 800 net new jobs in February, a drop that failed to offset the upward revisions of 600 for December. These shifts left employment in this sector 7.98 percent higher than the final pre-pandemic monthly figure.

Notwithstanding January’s workmanlike result, all the pieces still seem to be in place for an accelerating manufacturing jobs rebound: the return of normal economic conditions generally (however choppily), Boeing’s brightening prospects, the continuing need for much more in the way of vaccines and other medical goods, the Biden administration’s stated determination to boost domestic output of CCP Virus-related products, and last – but surely not least – the sweeping tariffs placed by the Trump administration on imports from China that for the near future President Biden apparently will keep.

No one should forget, though, that one strong new headwind has appeared – a global shortage of semiconductors that is already depressing production across manufacturing. Yet even this disruptive event at bottom seems largely due to the unexpected speed of the U.S. economic bounceback, especially in sectors shut down almost entirely, like automotive manufacturing. So whatever the short-term difficulties it causes, the microchip shortage looks like it stems from the kinds of problems, to borrow from an old sports adage, that manufacturing and its workers ultimately would like to have.        

(What’s Left of) Our Economy: A Winning Streak Broken But a Still Encouraging Outlook for Manufacturing Jobs

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aerospace, Biden, CCP Virus, China, coronavirus, COVID 19, Donald Trump, Employment, healthcare goods, Jobs, Labor Department, machinery, manufacturing, NFP, non-farm payrolls, pharmaceuticals, PPE, tariffs, vaccines, Wuhan virus, {What's Left of) Our Economy

U.S. manufacturing’s eight-month streak of hiring gains ended in January, with industry shedding 10,000 jobs from December’s levels. Also dimming the results reported for the sector in this morning’s offiical employment figures were moderately negative revisions. Moreover, despite the CCP Virus emergency, and the vaccine production ramp up, job creation in health care-related manufacturing (where the most detailed figures only go up to December) remained disappointing.

Although the manufacturing jobs revisions for November and December weren’t nearly as great as the unusually large changes for the Labor Department’s overall U.S. jobs universe (called “non-farm payrolls”), they still weakened the employment outperformance recorded by the sector since job levels bottomed out in April.

December’s originally reported on-month manufacturing jobs increase was downgraded from 38,000 to 31,000. And although the November data saw their second upward revision (from 27,000 to 35,000 and now to 41,000), the findings for October fell all the way from 43,000 to 32,000. (They were originally reported as 33,000.)

The January numbers mean that manufacturing has regained 58.91 percent (803,000) of the 1.363 million jobs it lost during the pandemic’s first wave and resulting sweeping lockdowns in March and April.

That pace is now slightly behind that of the total private sector, which since April has recovered 60.34 percent (12.788 million) of the 21.191 million jobs lost last spring.

But manufacturing’s employment is still faring better than the total non-farm sector (which includes hard hit state and local governments). Overall, as of January, the economy has regained just 56.27 percent (12.47 million) of the 12.321 million jobs lost in March and April.

Despite decreasing in toto in January, employment in some manufacturing sectors nonetheless improved. These winners were led by the big chemicals industry (up 10,500), food products (2,200), and miscellaneous durable goods, computer and electronics products, and wood products (up 1,300 each). Within the computer sector, payrolls in semiconductors and related devices rose by 1,800.

January’s biggest losers were non-metallic mineral products (down 6,400), automotive (off by 5,300), fabricated metals products (a 4,100 loss), and electrical equipment and appliances (down 3,200).

Unfortunately, given its importance as an equipment supplier to the manufacturing sector and other important U.S. industries, employment in machinery declined by 700 on month in January, and revisions were deeply negative.

Also discouraging were the most recent jobs figures for healthcare-related manufacturing, especially given the vaccine progress and months of national alarm about dangerously inadequate domestic production of these critical goods.

Generally, employment increases continued, but the pace remains sluggish. For example, the broad pharmaceuticals and medicines sector added 2,200 jobs in December, and revisions were slightly positive. But payrolls here have grown by a mere 2.09 percent since February – the last month before the virus’ health and economic impact began to be fully felt.

Employment advanced again in December in the sub-sector containing vaccines. But about half of the sequential increase of 1,100 was offset by downward revisions for October and November. And this sub-sector’s total headcount is up just 4.35 percent since February.

The opposite pattern was seen in the manufacturing category containing personal healthcare-related protection devices (PPE) like facemasks, gloves, and medical gowns. Its payrolls rose fell by 400 sequentially from November to December, but revisions for the previous two months rose by the same miniscule total. Still, this industry’s 8.08 percent job growth since February led healthcare manufacturing by a wide margin.

Despite January’s setback, a reasonable case can be made that manufacturing’s employment prospects still look bright for several reasons. Progress will surely keep being made on the PPE front. Vaccine production is set to surge. A large aerospace sector long hobbled by Boeing’s safety woes is seeing the company’s troubled 737 Max model being recertified for flight by more and more countries. Any national and global recovery will see demand for air travel revive.  And because President Biden has decided to keep Donald Trump’s steep, sweeping tariffs on imports from China in place for the time being. Consequently, industry can be expected to supply more U.S. demand than usual as the economy returns to normal however quickly or slowly.

(What’s Left of) Our Economy: The Latest on the Virus, Lockdowns, and Jobs

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California, CCP Virus, coronavirus, COVID 19, Jobs, Labor Department, lockdowns, New York, public health, states, stay-at-home, Wallethub.com, Wuhan virus, {What's Left of) Our Economy

With the release last week of the Labor Department’s U.S. state-level employment data for December, we have a great new handle on the relationship between the various lockdown and stay-at-home policies mandated throughout the country, and the still horrific toll on job losses during the CCP Virus era.

And as with recent statistics on state-level economic growth (and contraction) rates (see here and here), the numbers seem to point to the economic curbs themselves as the biggest influence on employment levels and changes, as opposed to other factors, like individuals’ virus-induced fear of using various types of in-person services (like travel) and the resulting knock-on effects throughout the entire economy.

One major indication of the mandates’ impact comes, as with the growth figures, from the outsized job losses experienced in New York and California, two states with some of the most severe lockdown regimes imposed over the past year.

In December, 2019, just before the virus began spreading to the United States, New York and California accounted for 18.37 percent of all the nation’s non-farm jobs (the Labor Department’s U.S. jobs universe.) But one year later, their employment losses came to 27.91 percent of the U.S. total.

Additional reasons for blaming the mandates for the employment damage come from comparing the performances the best and worst jobs performers, and the least and most restrictive states. As with the previous post on growth levels, the ranking of mandate strictness comes from the Wallethub.com website. (And sharp-eyed readers will note that the rankings have changed over the last few months, which makes perfect sense since the lockdown regimes’ extent has fluctuated, too.)

First let’s see the Wallethub ranks of the states with the best employment records between December, 2019 and December, 2020. (The lower the rank, the more “open” the state.)

Top 10 job performers (by % change)       Wallethub.com rank

1. Idaho: +0.6                                                          14

1. Utah: +0.6                                                             6

2. Mississippi: -1.4                                                  21

3. Alabama: -1.7                                                      12

3. Georgia: -1.7                                                       18

4. Nebraska: -2.3                                                     17

5. South Carolina: -2.4                                            10

6. Arizona: -2.8                                                       30

6. Arkansas: -2.8                                                       4

6. Indiana: -2.8                                                       20

7. Montana: -2.9                                                     13

7. South Dakota: -2.9                                               2

8. Missouri: -3.1                                                       7

9. Tennessee: -3.2                                                  19

10. Texas: -3.3                                                        28

Right off the bat you’ll see that because of ties, the Top 10 is really a Top 15 – which actually serves our purposes even better. And the big takeaway here is that with one exception (Arizona) and one near-exception (Texas), all of these states rank in the top half on the open/closed scale (26 and lower for the 50 states plus the District of Columbia).

And of these 15 states, four were among the ten most open, and twelve were among the twenty most open.

Does the reverse proposition hold? Have the most closed states generally compiled the worst employment records? Here’s what the numbers say:

Bottom 10 job performers (by % change)     Wallethub.com rank

1. Hawaii: -13.8                                                          43

2. Michigan: -10.9                                                      29

3. New York: -10.4                                                     39

4. Massachusetts: -9.1                                                49

5. Vermont: 9.0                                                           45

6. New Hampshire: -8.8                                             23

7. Rhode Island: -8.7                                                  36

8. Minnesota: -8.3                                                      32

9. California: -8.0                                                       51

9. New Jersey: -8.0                                                     34

10. Delaware: -7.8                                                      33

10. Pennsylvania: -7.8                                                35

10. Oregon: -7.8                                                         37

Because of the “tie effect,” this Bottom 10 set is really a Bottom 13. Four of them fall in the category of ten most restrictive states (ranked between 51 and 41 on the Wallethub scale), and seven more are among the next ten most restrictive states. Moreover, only one state (New Hampshire) has been in the top half of most open states. So the relationship between lockdowns and employment performance looks strong from this perspective as well.

The issue can be examined the other way around, too – by examining the employment performance of the most open and least open states. Here are the results for the ten most open states. (As with the list of ten most closed states below, the Top Ten here really is a Top Ten.) They’re presented in descending order of openness.) 

Ten least restrictive on lockdowns         Job creation rank (out of 37)

Oklahoma:                                                                15

South Dakota:                                                            6

Iowa:                                                                         11

Arkansas:                                                                   5                  

Florida:                                                                    14

Utah:                                                                          1

Missouri:                                                                   7

Wisconsin:                                                               25

Alaska:                                                                    24

South Carolina:                                                         4

Revealingly, fully half of these states were among the ten states with the best employment records, three more were in the next ten. Consequently, eight of the ten ranked in the top half on the openness scale. (Because of the “tie effect,” the top half here starts at number 19 – of 37 differing state rankings).

And although Oklahoma looks like something of an exception here (the most consistently open state being only the 15^th best jobs performer), there’s a pretty simple explanation: Oklahoma’s economy is energy-heavy, and that sector has been absolutely slammed the deep recession experienced during the CCP Virus period.

Florida, which relies so heavily on tourism, has an “excuse” as well. (By the same token, though, it’s no coincidence that the worst employment performer, Hawaii, is tourism-dependent as well, along with fellow job laggards California and, to a lesser extent, New York.)

Finally, the table below shows how the most closed states fared in terms of job loss.  These are presented in descending order of “closed-ness.”

Ten most restrictive on lockdowns          Job creation rank (out of 37)

California:                                                                  31

Virginia:                                                                     12

Masschusetts:                                                             34

District of Columbia:                                                 21

New Mexico:                                                             26

Washington:                                                               18

Vermont:                                                                    33

North Carolina:                                                          10

Hawaii:                                                                      37

Illinois:                                                                      24

Fully four of these ten have been among the five worst employment states during the virus period (including tourism-reliant Hawaii and California). Three more (Illinois, New Mexico, and the District of Columbia) joined them in the bottom half. Of the two exceptions, Virginia’s solid employment record surely stems from its status not only as a state with a strongly growing information technology sector and an army of federal workers (many of whose jobs in turn owe to federal contracting).

One last point should be remembered as well: As extensively documented, the lockdowns and stay-at-home orders have generated their own serious healthcare damage . So the states with the relatively limited mandates surely have curbed both these CCP Virus costs as well as economic damage. Meaning that the already compelling case for anti-virus measures targeting the most vulnerable rather than indiscriminately putting the clamps on businesses and other forms of activity has just grown that much stronger.

(What’s Left of) Our Economy: More Evidence of U.S. Manufacturing’s Tariff-Bolstered Resilience

Tags

CCP Virus, China, Commerce Department, coronavirus, COVID 19, imports, Jobs, Labor Department, manufacturing, recession, recovery, tariffs, The Wall Street Journal, Trade, Trump, value added, Wuhan virus, {What's Left of) Our Economy

I must confess that I’m more than a little confused. On the one hand, I read in The Wall Street Journal two days ago that the Trump administration “used tariffs to try to drive manufacturing back home, although growth in factory jobs stalled once the administration resorted to levies that drove up costs for many factories.”

On the other hand, I read in The Wall Street Journal yesterday that U.S.-based manufacturing is recovering “quicker than expected” from the CCP Virus- and lockdowns-induced American recession. Moreover, this stellar performance is taking place amid “higher costs for materials used in everything from kitchen cabinets to washing machines to automobiles.”

Stranger still: Unquestionably, among the cost drivers for these materials have been those Trump tariffs, especially on imports from China – which are not only wide-ranging (covering some $360 billion worth of Chinese-made products when they were imposed in phases), and steep (with most standing at 25 percent).

In fact, “stellar” really isn’t the best adjective for the manufacturing surge. Try “record-shattering.” For the Commerce Department’s “GDP by Industry” statistics show that between the second and third quarters of this year, manufacturing value-added (an output measure that tries to eliminate the double-counting that results from including in manufacturing production levels both final products and all the parts, components, and materials that go into those products) shot up by 13.34 percent at an annual rate. That’s not only never happened before. It’s never come close to happening before – at least since 2005, when the relevant data series began.

To be fair, this growth stemmed from the rubberband-like effect of partial virus-related reopenings of economic activity. Specifically, it followed a record 12.47 percent nosedive between the first and second quarters. But who can reasonably doubt that the immense scale of the Trump tariffs suppressed the amount of Chinese goods that could have satisfied this renewed demand, as they had done so typically in the recent past – especially since China’s export machine recovered exceptionally quickly from the People’s Republic’s own virus outbreak and massive shutdowns?

Moreover, who can reasonably doubt that the exclusion of these imports from the U.S. market more than offset whatever price increases the tariffs created? Because however much these levies are reducing companies’ earnings and profits, every sale lost to a China-based rival – whether at home or abroad – means much less in the way of earnings and profits. 

And this strong American manufacturing growth pickup has put an end to that short-lived manufacturing jobs slowdown. From April of last year (when the CCP Virus’ economic impact peaked on a monthly basis ) through December, Labor Department data show that U.S. industry’s payrolls are up by 820,000 – much faster growth than the 37,000 increase during the same period in 2019. Of course, the incredibly abnormal sudden stop-and-start of virus-era economies not just in the United States but the world over (and in largely unsynchronized ways) sharply limits the use of all such comparisons, because they have so relatively little to do with the economic fundamentals.

At the same time, though, it’s entirely reasonable to expect U.S. manufacturing production and employment to keep expanding as post-CCP Virus normality returns. And as long as the Trump tariffs remain largely in place, the prospect of a renewed Chinese import flood will be one major headwind that domestic industry won’t have to fear.