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

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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.

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(What’s Left of) Our Economy: It’s Still the Same Old (Dreary) Story for Real U.S. Manufacturing Wages

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inflation-adjusted wages, manufacturing, manufacturing wages, private sector wages, wages, {What's Left of) Our Economy

Could anything be more revealing about the recent situation with America’s manufacturing wages than this development? Adjusted for inflation, industry’s wages were flat on a year-on-year basis. And that was their best such performance since July, 2017, when they rose by 0.65 percent over July, 2016’s levels.

Not that the news reported last Friday by the Bureau of Labor Statistics (BLS) was all bad for manufacturing workers. In December, their real wages increased by 0.28 percent on month – a pretty good performance by recent standards. Yet even that improvement represented a slowdown over the November sequential advance of 0.37 percent. (Both these monthly numbers are still preliminary.)

Moreover, not even the welcome advances of these last two data months was enough to lift manufacturing out of a long real wage recession. Price-adjusted hourly pay for its employees is still down a cumulative 0.28 percent since March, 2016.

In addition, the December data still left manufacturing a serious real wage laggard when compared with the private sector economy as a whole. (BLS doesn’t include government workers’ wages in these reports, since their wages are set by politicians’ decisions, not market forces, and therefore say almost nothing about the fundamentals of the U.S. labor market.)

Month-on-month, inflation-adjusted private sector wages advanced by 0.46 percent – their biggest such increase since the 1.05 percent spurt of January, 2015, and a much bigger increase than in after-inflation manufacturing wages.

On an annual basis, constant dollar private sector wages in December were up 1.12 percent – the strongest such rise since September, 2016’s 1.13 percent and, again, a much larger improvement than for real manufacturing wages.

And adding insult to injury, the gap between inflation-adjusted wages in manufacturing and in the private sector overall keeps widening. From the beginning of the current economic recovery (June, 2009) to last month, after-inflation private sector wages were up 7.24 times more (5.43 percent) than price-adjusted manufacturing wages (0.75 percent). As of the previous December, the gap was 5.69-to-one, as real private sector wages had risen by 4.27 percent, and real manufacturing wages had improved by the same 0.75 percent.

Following Up: More on Those Great New U.S. Manufacturing Jobs Figures

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Following Up, inflation-adjusted wages, Jobs, Labor Department, manufacturing, real wages, Trump, wages

Friday’s post focused on what the new U.S. jobs report that morning (containing December data) revealed about the Trump tariffs’ impact so far on domestic American manufacturing. (Overwhelmingly, they’ve done no harm.) But it’s also worth noting other industry-related highlights of this Labor Department release – and highlights they were.

First, the headline figure (32,000 net new manufacturing jobs created on-month in December) was the best such performance since last December’s 39,000. And the total revisions for October and November together added 3,000 jobs to the results for those two months. (The November and December figures are still preliminary. Further, starting next month, the Labor Department will start publishing revisions of the key data back to January 2014 – which will further change yesterday’s findings.)

Partly as a result of the last few months’ numbers, 2018 stands preliminarily as the best year for U.S. manufacturing job creation (284,000) since 1997 (304,000). The previous December-to-December manufacturing employment gain was 209,000.

Also, manufacturing jobs as a share of total non-farm jobs (the Labor Department’s definition of the total U.S. employment universe) rose to just under 8.55 percent – their highest level since July, 2016 (8.56 percent). At the start of the Trump administration (February, 2017 was its first full month in office), this figure stood at 8.49 percent. In other words, manufacturing payroll growth has been faster than overall payroll growth under President Trump.

Even so, manufacturing’s prior relative employment creation has been so weak that the sector still remains a laggard on this front for the recovery era as a whole.

Since bottoming out in February and March of 2010, manufacturing has regained 1.389 million (60.58 percent) of the 2.293 million jobs it had lost during the Great Recession and its aftermath. Overall private sector employment sank by 8.785 million during the downturn, but since then has regained 20.608 million jobs.

Manufacturing keeps trailing the overall private sector on the pay front, too. In December, pre-inflation manufacturing wages rose by 0.26 percent – considerably slower than the overall private sector’s 0.40 percent.

Year-on-year, current-dollar manufacturing wages are up by 1.98 percent – their best such performance since September, 2017 (2.18 percent). Between the previous Decembers, manufacturing hourly pay before inflation has advanced by 1.75 percent. But overall current-dollar private sector wages improved by 3.15 percent year-on-year in December.

In fact, since the current recovery began, in mid-2009, pre-inflation manufacturing wages have improved by only 18.60 percent. Overall private sector wages are 24.12 percent higher.

Moreover, the gap has been widening. The above figures show that, as of the latest data, private sector wages had grown 29.68 percent faster than manufacturing wages. As of the previous December, the difference was 24.80 percent.

Manufacturing’s pay performance looks even worse after adjusting for inflation. The latest data are from November – when manufacturing’s sequential increase (0.37 percent) actually topped that of the private sector (0.19 percent). (December’s won’t be published until the middle of this month.) But the November figures also show that, whereas private sector wages inched up year-on-year by 0.84 percent, manufacturing paychecks actually dipped by 0.27 percent.

Indeed, real manufacturing wages are cumulatively down by that amount since February, 2016 – meaning that, technically, they remain mired in a long recession (two or more date quarters of net deterioration).

Moreover, during the current economic recovery, inflation-adjusted manufacturing wages have risen less than a tenth as fast (0.47 percent) as private sector wages (4.95 percent). And the gap has widened significantly over the past year, when it stood at a 0.75 percent real wage increase for manufacturing versus a 4.07 percent rise for the private sector overall.

(What’s Left of) Our Economy: New U.S. Jobs Report Delivers (Another) Face Slap to Trump’s Trade Critics

Tags

China, durable goods, global supply chains, Jobs, manufacturing, metals, metals tariffs, metals-using industries, tariffs, trade war, Trump, {What's Left of) Our Economy

My deepest sympathies to the nation’s tariff fear-mongers, who keep insisting that President Trump’s levies on imports have been decimating America’s domestic manufacturing sector. This morning’s Labor Department report on the U.S. employment situation in December reveals that they’re still as pathetically wrong as ever.

Let’s start, as usual, with the impact of the President’s tariffs on steel and aluminum, which started to be imposed in April, and which allegedly have been hammering metals-using industries. This Trump decision is supposed to epitomize the folly of such protectionist policies in general, and metals tariffs in particular, since metals-using industries generate much more output than metals-producing indusries, and employ many more workers.

Yet has been the case since the onset of these levies, the data makes abundantly clear that the metals-using sectors generally have been outperforming not only the rest of manufacturing jobs-wise, but the private sector economy as a whole. Here are the numbers for April through the last three data months (keeping in mind that the November and December figures are both still preliminary):

                                                   thru October     thru November     thru December

entire private sector:                +0.99 percent      +1.13 percent      +1.37 percent

overall manufacturing:           + 0.99 percent      +1.20 percent      +1.45 percent

durable goods:                         +1.25 percent      +1.43 percent      +1.67 percent

fabricated metals products:     +1.33 percent      +1.30 percent      +1.75 percent

non-electrical machinery:       +1.66 percent      +1.90 percent       +2.20 percent

automotive vehicles & parts:  +0.73 percent      +0.58 percent      +0.77 percent

household appliances:             -1.25 percent       -1.41 percent        not available

aerospace products & parts:   +4.45 percent      +5.47 percent        not available

Notably, even in one major sector that’s been lagging – automotive – the pace of net new job creation has quickened a bit lately. And the industry that’s genuinely taken it on the employment chin – appliances – has been dealing both with a separate set of tariffs on large household laundry machines along with a major slump in the American housing sector.

The impact of the Trump administration’s wide-ranging China tariffs is tougher to identify, partly because they only began in July, and partly because Chinese inputs are found in so many manufacturing industries. But here are the data for sectors with extensive global supply chains that often pass through China:

                                                           July thru November     July thru December

entire private sector:                             +0.66 percent              +0.90 percent

overall manufacturing:                         +0.66 percent              +0.93 percent

chemicals:                                            +1.54 percent              +1.40 percent

non-electrical machinery:                    +0.66 percent              +0.96 percent

computer & electronics products:        +0.50 percent              +0.83 percent

automotive vehicles & parts:               +0.90 percent              +1.08 percent

With one exception – computer and electronics products – these globalized industries have outperformed, too. And even in that lagging sector, employment has been growing faster lately.

These results still don’t prove that President Trump was right in claiming that trade wars are “easy to win.” But they sure add to the evidence that, for the United States, they’re eminently winnable. And that the President’s critics are losing. 

Making News: New National Radio Podcast on U.S.-China Trade War Now On-Line

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Gordon G. Chang, Making News, manufacturing, tariffs, The John Batchelor Show, Trade, trade war, Trump

I’m pleased to announce that the podcast of my interview last night on John Batchelor’s nationally syndicated radio show is now on-line.  Click here for a great discussion among John, co-host Gordon G. Chang, and me that updates the situation with the U.S.-China trade conflict.

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

(What’s Left of) Our Economy: Orwellian Economic Reporting from Dow Jones

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Chris Williamson, Dow Jones, IHS Markit, manufacturing, Micah Maidenberg, {What's Left of) Our Economy

Everyone should agree that journalists should be skeptical of authority and its claims. In fact, all of us should be. But there’s clearly a point when skepticism goes way over the top, and today’s Dow Jones Newswires coverage of a new report on manufacturing in the United States is a perfect example. And P.S. It’s thrust mirrors that of way too much coverage of the Trump economy.

The subject of the article was the research firm IHS Markit’s survey of American industry in December. I’ve previously written that these reports suffer some significant limitations, mainly because they use a very different methodology than the federal government’s various releases on the economy. But although I hardly take them as gospel, I track them if only because so many other students of the economy – along with investors – follow them to a fault.

And here’s how reporter Micah Maidenberg described the results:

> “An index that gauges manufacturing production declined last month and business confidence looking a year out dropped to its lowest point in more than two years.”

> “The pace of new-order growth was the weakest since September 2017, IHS Market found.”

> “Output and backlogs rose but the pace of job creation last month hit a level last seen in September 2017.

“Business confidence fell to its lowest level since October 2016.”

> “IHS Markit Chief Business Economist Chris Williamson said the weaker pace of economic expansion caused manufacturers to become less upbeat about 2019.

“Companies reported difficulties in finding workers and inputs, but the December survey the index is based on also ‘revealed signs of slower demand growth from customers, as well as rising concerns over the impact of tariffs.'”

“Two-thirds of respondents reporting higher costs attributed the increase to tariffs, he said.”

Apparently the only positive news in the survey? “New export orders grew at an accelerated pace last month, amid stronger demand from foreign customers.”

So clearly, the U.S. domestic manufacturing sector is headed for big trouble, right? Well, as that famous used car company commercial put it, “Not exactly.” Because here’s what IHS Markit also said about the subject:

> “December data indicated a slower, albeit still solid, improvement in the health of the U.S. manufacturing sector.”

> “[I]nflationary pressures eased at the end of 2018.”

> “Production growth remained solid in December, and at a rate that matched that seen in November. The rise in output was attributed to greater new order volumes.”

It’s possible that Maidenberg accentuated the negative because that’s the tack taken by that IHS Markit economist Chris Williamson in his individual comments. He emphasized that:

“Manufacturers reported a weakened pace of expansion at the end of 2018, and grew less upbeat about prospects for 2019. Output and orders books grew at the slowest rates for over a year and optimism about the outlook slumped to its gloomiest for over two years. The month rounds of a fourth quarter in which manufacturing production is indicated to have risen at only a modest annualised rate of about 1%.”

The “key findings” highlighted by IHS Markit were comparably gloomy.

But the overall IHS Markit headline number came in at a decidedly expansionary 53.8 (any figure above 50 is regarded as expansionary). IHS Markit itself said that this number “suggested a weaker, but still strong, improvement in operating conditions across the goods producing sector” and that although “ending the year with a softer overall expansion, the final quarterly average of 2018 was strong and quicker than that seen in 2017.”

Overall, manufacturing output kept rising in December. New orders kept increasing. And payrolls kept expanding. For good measure, not only did the prices manufacturers needed to pay for their parts, components, materials, and other inputs ease to an eleven-month low (to a level still deemed higher than average). But the prices manufacturers received for the goods they made “rose at a solid rate.”

Yes, momentum matters, and signs that it’s slackening somewhat are newsworthy. But so is the evidence that U.S.-based manufacturing keeps trucking along – whether reporters, and their editors, want to recognize this or not.

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

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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.

 

Our So-Called Foreign Policy: Paul Volcker has Just Condemned Globalism

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alliances, Barron's, Federal Reserve, finance, globalism, manufacturing, Our So-Called Foreign Policy, Paul Volcker, Trade

For decades, anyone (like yours truly) who’s even intelligently argued for fundamentally new strategies for U.S. foreign policy and trade policy has been dismissed by defenders of the longstanding globalist approaches as an isolationist or a know-nothing or a protectionist (to name a few slurs). So imagine my surprise to see the other day my own critique of globalism (which decries both its national security and economic dimensions) being closely mirrored by no less than Paul Volcker. Even better, Volcker seems to agree that the mistakes made by both the main aspects of globalism are closely related.

To remind, Volcker is a former Chairman of the Federal Reserve who, as top official at the central bank, had the rare combination of economic smarts and political courage to understand that the only plausible way to end the raging inflation that began crippling the country in the late-1970s was to clamp down hard on credit. A deep recession resulted, but largely because of Volcker’s tight-fisted approach, the economy’s subsequent growth during the 1980s and 1990s was significantly healthier (though not perfectly healthy) than before Volcker hiked interest rates and curbed the money supply’s expansion.

Previously, he served in a senior Treasury Department role at a key juncture of post-World War II U.S. and world economic history (when the post-war global monetary order was falling apart, and a new jerrybuilt order was cobbled together), and as an economist at the Fed. Since leaving the central bank (in 1987), Volcker has been a highly successful advocate of Wall Street reforms and a respected voice for responsible economic policies.  (Here’s a short, handy bio.)

Also to remind, my own basic description of what’s been wrong with America’s globalist policies is that they’ve acted as if developing various types of international arrangements (including institutions like the UN and International Monetary Fund and military alliances), which have been aimed at grandiose global goals (the world’s pacification via the spread of democracy and global economic integration), were the best guarantors of achieving acceptable levels of U.S. security and well-being. (See this article for the most recent, comprehensive statement of these views.)

Consequently, globalists softpedaled efforts to create and sustain the national military and economic strength needed for the country to survive and prosper in the world as it was likely to remain for the foreseeable future: dog-eat-dog and tumultuous. In the process, they regularly sacrificed crucial chunks of the real economy (that is, its most productive sectors) – and the huge number of good jobs they supported – in quixotic efforts to bolster those institutions and to win and keep those allies. As a result, they lost sight of what should be the overriding objective of all foreign policymakers: promoting the interests of the great majority of their own citizens in the most realistic, responsible possible ways (and my definition of responsibility includes financial responsibility).

Actually, Volcker’s indictment is even harsher than mine, at least in tone. In this interview with Barron‘s last week, he suggested that the globalists’ priorities were driven by their desire that America “dominate politically and foreign policy-wise.”

But the substance of our perspectives are remarkably similar. As Volcker argued (and it’s worth quoting the relevant passages in full):

“We were willing to run these current account deficits [in order to pay the mounting costs of globalism without requiring Americans to pay for them with politically toxic higher taxes], and it was favorable for businesses—they could invest abroad, import more freely. But eventually it breaks down. During that process, you lost a lot of small American manufacturing. Now we’re getting the blowback from that. A lot of people feel left out, and they were! We took great pride in open markets, free competition, no tariffs. That pleases the scholars, it pleases big business, but it doesn’t please the people in the part of the country that lost out.

“[Interviewer] Is that an argument for protectionist…?

“Sounds awful, doesn’t it? That’s a bad word.

“Everyone wants to help the home team. We were more interested in dominating politically and foreign-policy-wise. And then we paid, sacrificing rural industry in the process.

“When I was back in the Treasury, the old Treasury bureaucrats would be like, oh God, somebody’s going to visit the president next week, what’s he going to give away? Because other country’s leaders were intent on encouraging the U.S. to buy from them, and the president would say OK, you’re part of NATO, you’re this, you’re that, all these individually small concessions.

“[Interviewer] Am I oversimplifying what you’re saying: The Nixon shock [Nixon administration policies that brought the post-war monetary system to an end] which bought us 40 more years of political dominance?

“I don’t want to overdo it, but yeah. It oiled the wheels of our foreign policy, building a whole network of allies and international institutions and so forth. That’s part of the process, it’s not the whole process. The top dog pays the price [laughing].”

Because I’ve closely followed Volcker’s career, I’m more surprised by the bluntness of this analysis, not its content. But there was one aspect I found genuinely unexpected – his description of Treasury Department career bureaucrats. For decades, in my experience, they’ve been among the truest believers in globalism, including in the desirability of neglecting the productive economy in favor of finance. It seems that in Volcker’s day, they were far more realistic.

As with any argument worth making, critiques of globalism shouldn’t need to rely on “appeals to authority” – the specious practice of insisting on the superiority of a certain viewpoint mainly because supposed experts agree with it. But who could reasonably fault any globalism critics who take pride in being in such splendid company?

(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. 

(What’s Left of) Our Economy: Today’s Jobs Data Once More Refutes Tariff Alarmism

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aluminum, China, Jobs, manufacturing, metals tariffs, metals-using industries, private sector, steel, tariffs, Trade, Trump, {What's Left of) Our Economy

As usual with these releases lately, the newest U.S. monthly jobs report (for November) contains lots of valuable information about the impact of President Trump’s tariff-centric policy on the domestic economy. And as usual, this morning’s findings provide ample evidence that manufacturing sectors widely reported to be either currently hurting or likely to be damaged by levies either on imports of steel and aluminum, or products from China, are actually outperforming the rest of industry and even the rest of the entire economy.

Let’s begin with manufacturing industries that make heavy use of metals as inputs, and that have often been portrayed as major victims of the Trump metals tariffs. Here are the changes in their payrolls since April – i.e., the months since those tariffs began to be imposed in late March. For comparison’s sake, the table also includes the employment results for the entire private sector, and for manufacturing as a whole.

                                              thru September     thru October       thru November

entire private sector:             +0.77 percent      +1.11 percent       +1.10 percent

overall manufacturing:        + 0.76 percent      +0.96 percent       +1.18 percent

durable goods:                      +1.01 percent      +1.21 percent       +1.40 percent

fabricated metals products:  +1.16 percent      +1.12 percent       +1.01 percent

non-electrical machinery:    +1.39 percent      +1.68 percent       +1.85 percent

automotive vehicles & parts: +0.08 percent    +0.73 percent       +0.64 percent

household appliances:            -0.31 percent     -1.10 percent         not available

aerospace products & parts: +3.75 percent      +4.43 percent        not available

Once again, the heavy metals-users generally have been performing well. Household appliances and the automotive sector seem to be the noteworthy laggards. But the former have also been hit by a separate set of tariffs on large household laundry machines as well as a slump in the nation’s housing sector. And most analysts believe that U.S. auto sales have recently peaked because of that market’s individual dynamics and cycles.

Supporting this analysis: The strong performance of other big metals-using industries, like aerospace and non-electrical machinery – which underscores what should be the obvious reality that numerous developments and forces influence employment trends in any given part of the economy.

The only possible area of concern is fabricated metals products, where jobs are still increasing, but where the pace of employment creation has slowed to some degree.

It’s tougher to judge definitively the impact of President Trump’s tariffs on imports from China both because they haven’t been in place for as long as the metals duties, and because they entail such a large number of goods. But given those caveats, it’s still tough to see anywhere in the jobs data support for the conviction that these tariffs either are backfiring badly on American industry or will do so because U.S. domestic manufacturers rely so extensively on so many Chinese-made parts, components, and materials.

If you’re skeptical, take a look at the job-creation records of key American industries with extensive global supply chains – including many Chinese links. This table starts in July, because the initial tranche of China tariffs was imposed during the first week of that month. And again, for comparison’s sake, it includes the economy’s entire private sector:

July through November

entire private sector:                        +0.63 percent

overall manufacturing                     +0.65 percent

chemicals:                                       +1.62 percent

non-electrical machinery:               +0.61 percent

computer & electronics products:   +0.47 percent

automotive vehicles & parts:          +0.96 percent

non-electrical machinery:               +0.61 percent

Judging the China’s tariffs’ real impact will of course become even tougher for the time being, given the 90-day trade truce just agreed to by Washington and Beijing, which may reduce domestic companies’ uncertainty as to the wisdom of continuing business-as-usual with China – or may not. So far, however, claims of widespread or even likely economic harm stemming from this bilateral trade war look as deserving of urban legend status as this year’s metals tariffs alarmism.