(What’s Left of) Our Economy: New Fed Figures Show Still More Solid Metals-Users Growth Despite Tariffs

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

Although the media remains far from catching on, with the release this morning of the Federal Reserve’s latest manufacturing production figures (for August), it should no longer be news to report that President Trump’s metals tariffs show absolutely no sign of harming U.S. industry overall or sectors that use significant amounts of steel and aluminum – where the levies have been imposed. The real metals tariff-related news will come if and when such damage actually does turn up in any official data.

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

overall manufacturing: +0.28 percent

durable goods:   +1.01 percent

fabricated metal products:  +0.22 percent

machinery:  +1.07 percent

automotive:  +4.02 percent

small appliances:  +0.81 percent

major appliances:  -2.76 percent

In general, the metals-using sectors have clearly performed quite well. Moreover, major appliance makers – the top exception – have of course, have been hit not only with the metals tariffs, but with safeguard tariffs on one of their products – large residential laundry machines.

But since a single month does not a trend make, let’s examine the inflation-adjusted output data since the advent of the first metals tariffs – in late March. Once again, the big takeaway is that the metals-using sectors in general have at least held their own. In fact, except for the major appliances category, their price-adjusted production has begun to accelerate.

                                                  old thru July   new thru July    new thru Aug

overall manufacturing                     +0.25                +0.26                 +0.54

durables manufacturing                    +0.48               -0.09                  +0.94

fabricated metals products               +0.79               +0.62                 +0.84

machinery                                        +0.09                +0.69                  +1.77

automotive                                        -0.63                -3.38                   +0.49

small appliances                               -5.33                -4.11                     -3.34

major appliances                              -5.25                -2.87                     -5.55

Finally, the metals tariffs now appear to be resulting in notable after-inflation production increases in the protected metals sectors, too. In August, constant dollar primary metals production grew on month by three percent – its best such performance since March, 2010 (3.43 percent), when the current economy-wide recovery was in its very early stages. In addition, since the first steel and aluminum tariffs went into effect, real primary metals production is up 1.15 percent – which compares very favorably with the output performance of manufacturing in general, the durable goods super-sector, and the metals-using industries.

In other words, rather than sitting on their hands and just enjoying the higher profits enabled by the tariffs, it seems that the steel and aluminum industries are indeed ramping up production. So in a world where trade-related news was reported accurately, reports on the new industrial production numbers would specify that the levies so far are a win-win for the economy – working as intended for the metals makers and leaving metals users unscathed. Let’s see if this winds up as an accurate description of this world. 

  

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(What’s Left of) Our Economy: Still No Evidence of Noteworthy Inflation from Metals Tariffs

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aluminum, inflation, Labor Department, metals tariffs, metals-using industries, PPI, Producer Price Index, steel, tariffs, Trade, Trump, {What's Left of) Our Economy

Another day, another set of U.S. government data showing that, so far, claims that President Trump’s metals tariffs are devastating steel- and aluminum-using industries and triggering virulent inflation have no basis in fact other than a few anecdotes.

The latest figures come from the Labor Department and they show changes in the nation’s producer prices – that is, inflation (or the lack thereof) in what businesses pay for the goods and services they buy in order to turn out their final products, as opposed to inflation in the prices that consumers pay for their own purchases.

Conveniently, the monthly Producer Price Index (PPI) release comes with tables that show in considerable detail exactly where and how much prices have changed since April – the first full month following the imposition of the first set of metals tariffs. So nothing could be easier than to look at this morning’s report and see that from May through August (the time period covered), prices of steel mill products have grown sequentially by 1.9 percent, 1.6 percent, and 2.6 percent, respectively. That’s higher than producer price increases for the economy as a whole. But the numbers don’t exactly scream “raging inflation.”

That goes double for aluminum mill products. After rising by 2.1 percent between May and June, they actually dropped in each of the next two months – by three and 2.1 percent, respectively.

As a result, it shouldn’t be the least bit surprising that there’s been no major producer price inflation for any of the metals-using industries tracked by the Labor Department during this period. Here are some representative numbers:

                                     May-June           June-July             July-August

metal containers          0.6 percent         0.4 percent             0.4 percent

hardware                     0.2 percent         0.5 percent             0.0 percent

fabricated structural    0.9 percent        -0.6 percent             0.2 percent

metal products

bolts, nuts, screws,     -0.5 percent         0.5 percent            0.6 percent

rivets, & washers

non-fluid power           0.2 percent        0.1 percent             0.3 percent 

metal valves 

ball & roller bearings   0.0 percent        0.2 percent             0.6 percent

machine shop              -0.1 percent        0.6 percent             0.0 percent   

  products 

motor vehicle parts     -0.1 percent        0.2 percent            -0.1 percent

The only evidence for a significant tariff impact comes from the year-on-year price changes. For aluminum mill products in August, it was 14 percent, for steel mill products 18.6 percent. These figures are not seasonally adjusted, unlike most of the above numbers, which are. But they’re very steep nonetheless. So is this the real evidence for the “devastating tariffs” argument?

No. And here’s why. A year ago, steel and aluminum products were being massively dumped into the U.S. market. That is, thanks to foreign government subsidies, they were artificially low, and by definition had little or nothing to do with free market forces. Naturally, metal-users liked this situation. But is this how we want the American economy to run? On the basis of addiction to foreign government decisions?

Moreover, the monthly numbers indicate some fading even of these price spikes.

As noted above, nothing could be easier than to look up these data – and report on them in news stories. But since other official numbers making clear that tariff fears so far have been nothing-burgers have been studiously ignored by the Mainstream Media, the case for optimism concerning producer prices looks less than convincing.

(What’s Left of) Our Economy: The New Jobs Report Shows that the Metal Tariffs Sky Keeps Not Falling

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aluminum, core capex, Jobs, Labor Department, manufacturing, metals tariffs, metals-using industries, private sector, steel, tariffs, Trade, {What's Left of) Our Economy

This is getting just embarrassing. Economists and mainstream media reporters and pundits keep claiming that President Trump’s metals tariffs are already damaging the U.S. economy – and especially industries that heavily use the steel and aluminum that have become more expensive because of the levies on imports of those goods. (Here’s a new example.)

And the most authoritative data available keep demonstrating that these claims so far are absolute hokum. (See this RealityChek column for a summary and relevant links.) The latest evidence: this morning’s August jobs report from the Labor Department. It shows emphatically that those metals-using sectors have mainly created net new jobs at a faster pace than domestic manufacturing overall, and that several have boosted payrolls more rapidly than the entire private sector (including service industries that are not heavy metals users).

Here are the numbers showing the relevant rate of employment changes from April (the first full month in which the metals tariffs were in effect) through both July (where they stood as of the previous monthly jobs report) and through August:

                                                       thru July                        thru August

entire private sector:                 +0.53 percent                   +0.64 percent

overall manufacturing:              +0.73 percent                   +0.47 percent

durable goods:                          +0.96 percent                   +0.57 percent

fabricated metals products:      +1.10 percent                   +1.17 percent

non-electrical machinery:         +1.43 percent                   +1.04 percent

automotive vehicles & parts:    +1.06 percent                  -1.08 percent

household appliances (thru June): -0.63 percent           +0.16 percent (thru July)

aerospace products & parts (thru June): +1.05 percent  +2.03 percent (thru July)

 

There have been some shifts within this list. But with the exception of automotive, no metals-using sector has slacked off more than manufacturing as a whole, and three of these industries (fabricated metals products, appliances, and aerospace) have picked up the pace. And even the metals-using durable goods super-sector as a whole didn’t fade much more on the employment front than manufacturing overall.

In addition, yesterday’s official business investment numbers confirmed that, through July, new orders for core capital goods (such machinery and equipment minus demand for defense and the volatile numbers for aircraft) have now advanced sequentially for four straight months. Since “core capex” is rightly viewed as the economy’s best proxy for business’ confidence in its future prospects, these results stuck a new fork in the narrative that the Trump tariffs would vitiate such spending by boosting that predominant bugaboo of corporate planning – uncertainty.

The new jobs report did contain some disquieting news for domestic manufacturing. Payrolls fell on month in August (by 3,000) for the first time since July, 2017. And the revisions pretty much cut the previously reported impressive June and July gains in half. (The new July increase of 18,000 is still preliminary.)

But today’s employment release also made clear that, after several months of metals tariffs, the fears about their impact are no more than fears. Why is that not considered newsworthy?

(What’s Left of) Our Economy: The Tariff-Induced Carnage in U.S. Metals-Using Manufacturing is Still MIA

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appliances, automotive, durable goods, fabricated metal products, Federal Reserve, industrial production, machinery, manufacturing, metals tariffs, metals-using industries, tariffs, Trade, Trump, washing machines, {What's Left of) Our Economy

The July figures for after-inflation U.S. manufacturing production came in this morning from the Federal Reserve, and they further debunk widespread reports that President Trump’s tariff-heavy trade policies – and particular his levies on steel and aluminum imports – are backfiring badly by decimating metals-using manufacturing sectors that dwarf the steel and aluminum makers.

Let’s first look at the monthly numbers, and compare the (preliminary) real growth of major metals-using sectors and manufacturing overall from June to July:

overall manufacturing:  +0.31 percent

durable goods:   +0.39 percent

fab metals:  -0.03 percent

machinery:  +0.56 percent

automotive:  +0.94 percent

small appliances:  -1.41 percent

major appliances:  -4.56 percent

Clearly, most metals-using sectors actually outperformed overall, with the top exceptions being appliance makers. Those in the major appliance category, of course, have been hit not only with the metals tariffs, but with safeguard tariffs on one of their actual products – large residential laundry machines.

Moreover, the output data since the advent of the first metals tariffs – in late March – show that the metals-using sectors in general have at least held their own. Here are the inflation-adjusted output percentage changes since April; they include the initially reported numbers through June (released by the Fed last month), and the revised June and initial July figures (released this morning).

                                                       old thru June   new thru June    new thru July

overall manufacturing                     – 0.21                +0.06                 +0.25

durables manufacturing                    -0.05               +0.09                  +0.48

fabricated metals products               +0.90               +0.82                 +0.79

machinery                                         -0.75                -0.47                  +0.09

automotive                                        -0.68                -1.56                   -0.63

small appliances                               -3.31                -3.98                   -5.33

major appliances                              -3.16                -0.73                    -5.25

Although the results for the very large machinery and automotive sectors look worse than the overall manufacturing numbers at first glance, they’ve each been undermined by some one-off developments.

In machinery, as reported here last month, the subpar post-April constant dollar growth clearly reflects some giveback from a big production jump between March and April. This increase was initially reported as a 2.27 percent surge, and it was estimated this morning at a still impressive 2.21 percent.

In automotive, production is still recovering from the effects of a fire in early May at a factory that produced parts for a popular Ford pickup truck, and which depressed after-inflation output that month by a huge 8.52 percent.

The post-April numbers confirm that both appliance sectors continue to be the big tariff losers, but the rest of the data show that they’ve been the exceptions, not the rule.

As usual with data, “past performance does not guarantee future results.” But the new Fed figures (along with comparable employment figures I’ve reported) also make clear that, so far, claims of major tariff-induced losses for domestic metals-using manufacturing belong in the realm of speculation, not of facts.

(What’s Left of) Our Economy: Trump Metals Tariffs Coverage has Just (Again) Been Exposed as Largely Fake News

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ABC News, aluminum, Associated Press, Bloomberg, CBS News, CNN, durable goods, Financial Times, Jobs, Mainstream Media, manufacturing, Marketwatch.com, metals, metals-using industries, NBC News, PBS, private sector, Reuters, steel, tariffs, The New York Times, The Wall Street Journal, Trade, Trump, Washington Post, {What's Left of) Our Economy

In case you still think that President Trump’s charges of fake news-peddling by the national news media are fake news themselves, consider this: For the second time in two months, if you decided to hold your breath till you found a Mainstream Media item reporting that the America’s metals-using industries have been major job-creation leaders, not laggards, you’d have died.

Such omissions are especially important because since the Trump administration began imposing tariffs on steel and aluminum imports (in March), the media has been filled not only with predictions of massive employment and production losses in metals-using manufacturing (because the prices of two noteworthy inputs for these industries was bound to rise), but with accounts of actual economic damage that numerous companies in these sectors have already suffered. (See here and here for just two examples.) 

Last month, I noted that, for all these accounts, authoritative government data (through June) showed that the metals-using industries’ performance by both measures had both generally improved, and had indeed both generally improved more than job creation and output in the rest of manufacturing.

Since then, more steel and aluminum tariffs were put in place (mainly because some major U.S. trade partners initially exempted from the tariffs were subjected to the levies). And what did we learn from the newest jobs report, which was released last Friday, and took the story through July (on a preliminary basis)? That the metals-using industries continue to set the national job-creation pace for the entire economy, not simply for manufacturing.

Here are the percentage gains for employment in some major sectors of the economy from April (the first month during which any metals tariffs effects would have been felt) through July except for the industries noted:

entire private sector: +0.53 percent

overall manufacturing: +0.73 percent

durable goods: +0.96 percent

fabricated metals products: +1.10 percent

non-electrical machinery: +1.43 percent

automotive vehicles & parts: +1.06 percent

household appliances (thru June): -0.63 percent

aerospace products & parts (thru June): +1.05 percent

Unfortunately, it was not possible to learn any of this from America’s leading news organizations. For these figures were completely ignored.

To their credit, some leading media mentioned that Trump tariffs and trade war fears in general seemed to be having no effect on manufacturing job creation overall despite industry’s exposure in principle to the fall-out. These included the Associated Press, The New York Times, the Financial Times, CNN, ABC News, and NBC News. Yet the metals-using sectors were never mentioned.

As for The Wall Street Journal, the Washington Post, and CBS News, they made no connection of the tariff/trade war-manufacturing job connection whatever.

And several news organizations actually tried to rationalize the unexpected results. Reuters, for example, claimed that “With manufacturing payrolls increasing by the most in seven months, the moderation in hiring reported by the Labor Department on Friday likely does not reflect the rising trade tensions between the United States and other nations including China.”

According to PBS, “Economists say it is too early to tell whether the Trump administration’s tariffs on imported steel and aluminum are having a significant effect on manufacturing jobs.”

Bloomberg and Marketwatch.com weren’t as disingenuous, but still felt compelled to contend that rising trade tensions continued to cast a long shadow on the job markets’ future – without reporting that, if anything, new U.S. policies and statements were so far having exactly the opposite effect on parts of the economy most exposed to existing metals tariffs.

But no account of press coverage of these Trump trade policies would be complete without observing an equally weird development: Neither the President nor anyone else in his administration has pointed to the outperformance of the metals-using industries, either.

In a little over a week, the nation will get its next major opportunity to gauge the impact of metals and other tariffs, and future possibilities thereof – when the Federal Reserve releases the July industrial production data, which includes detailed statistics on inflation-adjusted manufacturing output. Will the Mainstream Media finally zero in on the sectors where the tariff rubber hits the road? At this rate, Americans should be grateful if they simply ended the string of job loss and other Chicken Little metals tariff impact stories.