(What’s Left of) Our Economy: Is Manufacturing Employment Being Undercut by Boeing Along with Trade Wars?

Tags

737 Max, aerospace, aircraft, aluminum, Boeing, China, Jobs, manufacturing, metals, metals tariffs, metals-using industries, steel, supply chain, tariffs, trade war, {What's Left of) Our Economy

One of the biggest questions raised by the new (lousy) manufacturing results of this morning’s monthly U.S. jobs report concerns whether industry’s dismal recent performance is being impacted more by President Trump’s tariff-heavy trade policies or by Boeing’s aircraft safety woes. The bulk of the evidence released this morning seems to point to the trade wars as the continuing main culprit, but also to some Boeing-related puzzles. 

Overall, the sector lost 12,000 jobs on month in December – its worst such result (excluding October, whose figures were distorted by the General Motors strike) since August, 2016’s 23,000 decrease).  Moreover, the year-end annual manufacturing jobs gain of 46,000 was the lowest such figure since 2016’s 7,000 loss.  (For comparison’s sake, 2018’s annual manufacturing employment increase of 264,000 was the best such result since 1997’s 304,000.  

The trade wars evidence for the recent deterioration comes in the form of comparisons between the major metals-using industries during the early months following the imposition of tariffs on steel and aluminum, and afterwards (when many Trump critics argue that the trade curbs’ impact began sinking in). As always, the impact of Mr. Trump’s levies on imports from China remain too diffused throughout the manufacturing sector – and too unevenly so – to be gauged reliably. For good measure, they’ve also been threatened and applied in a confusing, on-and-off manner, and the recent Phase One trade deal and announcement of follow-on negotiations looks unlikely to end much of the measurement uncertainty.

First, here are the data on employment changes in those metals-using sectors from April, 2018 (the first full month during which the tariffs were in effect) through last month. Figures for the U.S. private sector overall, manufacturing overall, and manufacturing’s durable goods super-sector (in which most of the main metals users are classified) are included for comparison’s sake. Keep in mind that the results for household appliances also reflect a separate set of tariffs for large household laundry machines that have been in place since February, 2018.

                                                  Old thru Nov      New thru Nov       Thru Dec

entire private sector:                +2.82 percent      +2.81 percent    +2.92 percent

overall manufacturing:            +1.83 percent      +1.84 percent    +1.75 percent

durable goods:                         +1.99 percent      +2.02 percent    +1.94 percent

fabricated metals products:     +1.51 percent       +1.45 percent   +0.96 percent

non-electrical machinery:       +1.26 percent       +1.56 percent   +1.37 percent

automotive vehicles & parts:   -0.45 percent        -0.73 percent    -0.81 percent

household appliances*:            not available        -5.84 percent     not available

aerospace products & parts*:  not available        +9.02 percent     not available

*data are one month behind

There’s no mistaking that net new hiring in the metals-using sectors has been slower than in the rest of manufacturing and the private sector. As is clear from the table below, that’s a substantial change from the early post-metals tariffs period (presented here as April, 2018 through December, 2018 and January, 2019), when most metals-users were leaders in boosting payrolls:

                                                                Thru December           Thru January

entire private sector:                                +1.36 percent            +1.60 percent

overall manufacturing:                            +1.39 percent            +1.49 percent

durable goods:                                         +1.72 percent            +1.97 percent

fabricated metals products:                     +1.57 percent            +1.78 percent

non-electrical machinery:                        +2.33 percent           +2.57 percent

automotive vehicles & parts:                   +1.07 percent           +1.15 percent

household appliances:                              -2.05 percent –           2.52 percent

aerospace products & parts:                    +5.47 percent           +5.87 percent

But what about the Boeing effect – which figures to be considerable given the major role played by the aircraft and aerospace giant not only in American industry but the entire economy? As the data below show, the impact of the company’s production slowdown and more recent suspension of the previously best-selling but flawed 737 Max model (not to mention worldwide groundings) is anything but clear-cut. Presented here are the job change figures for aircraft and related parts industries, along with the numbers for other major supplier industries and the usual comparison sectors for the eight months preceding and following the announcement of global 737 Max groundings last March. The latest available data for the aerospace-specific industries only go through November, so that’s the final month used for the entire table.

                                                 July, 2018 thru March           March thru Nov

entire private sector:                     +1.38 percent                    +1.03 percent

overall manufacturing:                 +0.98 percent                    +0.28 percent

durable goods:                              +1.17 percent                    +0.11 percent

fabricated metals products:          +0.89 percent                     -0.31 percent

non-electrical machinery:            +1.38 percent                     -1.16 percent

aerospace products & parts:        +4.34 percent                    +2.27 percent

aircraft:                                        +6.59 percent                    +2.09 percent

aircraft engines & engine parts:  +1.04 percent                    +3.67 percent

non-engine aircraft parts/equip: +3.06 percent                     +1.22 percent

The pattern seems to show employment slowdowns nearly across the board. But the two non-aerospace-specific supplier industries – fabricated metals and non-electrical machinery – saw net hiring increases turn into net hiring decreases. Moreover, in aircraft engines and engine parts, payroll improvements actually accelerated.

At least some of this apparent paradox might result from the November end date used here. Boeing didn’t decide to suspend outright production of the troubled model until December 16, and the decision won’t even go into effect until sometime this month. Indeed, the company initially announced that no layoffs were accompanying the halt, although significant workforce reduction plans were finally made public yesterday. In this vein, reports of actual supply chain employment effects didn’t begin appearing until mid-December. Moreover, it’s possible that employment pain has been felt by the non-aerospace-specific companies in Boeing’s vast domestic supply chain before it spread to the aerospace-related firms.

So the safest bottom line so far seems to be this: Contributors to manufacturing’s recent jobs slump might now include both trade war- and non trade war-related developments. And anyone singling out one or the other deserves considerable skepticism.

Glad I Didn’t Say That! The Epic Fail of Tariff Fear-Mongering

Tags

aluminum, China, consumer price index, consumers, core inflation, Glad I Didn't Say That!, inflation, manufacturing, metals, metals-using industries, Producer Price Index, steel, tariffs, Trade, trade war, Trump

“Trump’s trade war may soon hit consumers’ wallets and paychecks.”

–NBC News, July 18, 2018

“Tariffs will surely lead to higher prices for imported goods and, to a lesser extent, prices for non-imported goods that use imported materials.”

–Wharton School of Business, University of Pennsylvania, July 18, 2018

“Tariffs are about to hit consumers, and it won’t be pretty.”

–CNBC, July 25, 2018

“Trade restrictions, by their nature, result in price increases for the goods in question. If the price of steel and aluminum goes up, manufacturers will be forced to pass those costs onto American consumers.”

–The Heritage Foundation, March 2, 2018

U.S. core consumer price* index year on year, November: +0.1 percent

U.S. core producer price index** year on year, November: +0.5 percent

*commodities less food and energy

**final demand goods less food and energy

(Sources: “Trump’s trade war may soon hit consumers’ wallets and paychecks,” by Ben Popken, NBC News, July 18, 2018, https://www.nbcnews.com/business/economy/trump-s-trade-war-may-soon-impact-consumers-wallets-paychecks-n890576: “Tariff Troubles: Will Consumers Feel the Pinch?” Public Policy, Knowledge@Wharton, Wharton School of Business, University of Pennsylvania, July 30, 2018, https://knowledge.wharton.upenn.edu/article/trumps-tariffs-will-impact-average-consumer/; “Tariffs are about to hit consumers, and it won’t be pretty,” by Jeff Cox, CNBC, July 25, 2018, https://www.cnbc.com/2018/07/25/tariffs-are-about-to-hit-consumers-and-it-wont-be-pretty.html; “3 Reasons Why Trump’s Tariffs Would Hurt American Workers,” by Tori K. Smith and Jay Van Andel, Commentary, The Heritage Foundation, March 2, 2018, https://www.heritage.org/trade/commentary/3-reasons-why-trumps-tariffs-would-hurt-american-workers. All compiled in “Christmas Miracle: Rising Wages and Low Inflation Promise a Very Merry Holiday Season,” by John Carney, Breitbart.com, December 11, 2018, https://www.breitbart.com/economy/2019/12/11/low-inflation-christmas/. “Consumer Price Index – November 2019, USDL-19-2144, News Release, Bureau of Labor Statistics, U.S. Department of Labor, December 11, 2018, https://www.bls.gov/news.release/pdf/cpi.pdf; and “Producer Price Indexes – November, 2019, USDL 19-2146, News Release, Bureau of Labor Statistics, U.S. Department of Labor, December 12, 2018, https://www.bls.gov/news.release/pdf/ppi.pdf)

(What’s Left of) Our Economy: Manufacturing’s Recession Lengthens but Tariffs’ Role Stays Fuzzy

Tags

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

The modest momentum showed by domestic manufacturing in the previous two Federal Reserve industrial production reports disappeared in this morning’s edition of the monthly survey, as overall real manufacturing output in July fell month-to-month (by 0.36 percent) for the first time since April. Worse, the new data lengthened domestic industry’s recession, with inflation-adjusted production now off by a hair (0.004 percent) since April, 2018 – a stretch much longer than the two straight quarters of cumulative decline that qualify as a downturn for most economists.

This morning’s Fed numbers also provide some additional evidence that President Trump’s tariff-centric trade policies have begun to erode manufacturing’s performance. But only some. Specifically, whereas in the first months following the imposition of metals tariffs in particular, metals-using sectors were handily beating the rest of manufacturing by every major metric, July’s industrial production numbers showed that their more recent relative performance continues to have been much more mixed.

As usual, nearly all of the best evidence concerns the impact of the tariffs on steel and aluminum, for reasons including their relatively long duration (April, 2018 was the first full month they were in place), and the ease with which metals-using sectors can be identified. And as usual, the table below presents the output data for these sectors since April, 2018, with the data for manufacturing overall used as a control group.

                                              April thru May      April thru June       April thru July

overall manufacturing:          -0.20 percent        +0.36 percent             0 percent

durables manufacturing:       +0.96 percent        +1.47 percent        +1.23 percent

fabricated metals products:  +1.34 percent         +1.89 percent        +0.95 percent

machinery:                            +0.86 percent        +0.57 percent         -0.57 percent

automotive:                           -1.88 percent         +0.60 percent        +0.43 percent

major appliances:                  -2.00 percent          -4.47 percent        -5.99 percent

aircraft and parts:                 +0.73 percent         +2.46 percent        +4.23 percent

These figures show that for three of the five major metals-using sectors tracked (fabricated metals products, machinery, and major appliances), constant dollar output has worsened compared with such production in manufacturing as a whole. Relative performance for automotive and aircraft and parts, however, has improved – as it has for the durable goods super-sector in which the metals users are located.

Keep in mind also that results for the major appliance sector also remain affected by a separate set of product-specific levies on large household laundry equipment that began in February, 2018.

In contrast with the metals tariffs, the first full month for China tariffs of any kind was August, 2018, and the set of goods involved was relatively small. Complicating matters further is the U.S. Trade Representative’s office’s practice of listing the dutied products according to a classification scheme that differs significantly from that used by the rest of the U.S. government to monitor most major indicators of economic performance – including industrial production.

And as previously noted, most of the Made in China products tariff-ed so far have been intermediate goods (parts, components, materials, etc.) whose use by American manufacturers varies widely. Therefore, the impact of tariffs on these products undoubtedly varies widely, too. Moreover, the number of Chinese goods facing tariffs has increased dramatically since last August. Not only were the levies extended to an additional $200 billion worth of such imports from China in late September, 2018, but these duties were raised from ten percent to 25 percent in May, 2019. (See this time-line for the specifics.)

All the same, here are results for a handful of sectors reasonably certain to have faced tariff pressure since last August. Each column measuring real output changes since last August.

                                         August thru May     August thru June     August thru July

overall manufacturing:     -1.09 percent            -0.55 percent           -0.90 percent

ball bearings:                    -2.20 percent            -2.46 percent           -2.27 percent

industrial heating equip:   -4.11 percent            -5.16 percent           -5.21 percent

farm machinery & equip: -7.51 percent            -6.53 percent           -6.91 percent

oil/gas drilling platform: +4.03 percent            +2.22 percent           -0.17 percent      parts

A greater percentage of these sectors (three of four) generated worse performance versus manufacturing overall than was the case for the metals-using sectors. But the sample size is so small, and the the uncertainties so considerable, that these more downbeat results should still be viewed with the utmost caution. Ditto for claims that the Trump tariffs are killing U.S. manufacturing.

(What’s Left of) Our Economy: Tariffs-Led Consumer Inflation Grows…from Non-Existent to Slight

Tags

aluminum, Bureau of Labor Statistics, China, consumer price inflation, consumer prices, core inflation, inflation, metals, metals tariffs, metals-using industries, steel, tariffs, Trade, tradewar, Trump, {What's Left of) Our Economy

After a several-month lapse, I finally had a chance to review in detail the latest batch of official U.S. consumer price data, which came out yesterday. The big takeaway seems as follows: Whereas through April there was no evidence that President Trump’s tariffs per se were pushing up consumer prices, now there’s some. But the evidence certainly doesn’t paint a picture of the American shopper’s living standards tumbling steeply because of Mr. Trump’s various trade wars.

As usual, let’s examine the metals-using industries, since the Trump tariffs on steel and aluminum have been in place for a relatively long period (April, 2018 was their first full month) and for reasons to be explained below, because it’s much easier to identify these sectors than those presumably impacted by the China tariffs.

The table below presents the relevant figures for major metals-using industries sequentially for the latest data month (June), since the duties’ onset, and year-on-year for the two latest data months. In addition, the results for control groups (like for overall core inflation, and for foods sometimes packaged in metal cans in their fresh forms):

                             May-June        Since April, 2018       y/y May           y/y June

core inflation:   +0.22 percent      +2.39 percent        +1.99 percent   +2.13 percent

fresh fruits         -1.67 percent      +0.31 percent        +1.85 percent   +0.87 percent

  & vegs:

fresh fruits:        -2.06 percent      -2.85 percent         -0.95 percent     -1.85 percent

fresh vegs:         -1.24 percent     +4.10 percent        +5.20 percent    +4.09 percent

processed          +0.39 percent     +1.61 percent        +1.28 percent    +1.70 percent

  fruits & vegs

canned fruits:     -0.38 percent     +4.47 percent        +4.04 percent    +3.93 percent

& vegs

canned fruits:     -0.09 percent     +2.11 percent        +1.00 percent    +2.02 percent

canned vegs:     +1.26 percent     +6.04 percent        +5.49 percent    +5.28 percent

soups:                +0.26 percent     +2.59 percent        +0.37 percent    +0.30 percent

malt bevgs          -0.62 percent     +1.77 percent        +0.84 percent    +1.84 percent

  at home:

alcoholic bevgs  +0.20 percent     +1.34 percent        +2.17 percent    +1.46 percent

  away from hom:

non-frozen, non- -0.21 percent     +1.96 percent        +3.09 percent    +3.03 percent

  carbonated non-

  alcoholic rinks

carbted drinks:     -1.95 percent    +3.33 percent        +5.75 percent    +2.71 percent

  juices & non-     -0.96 percent    +2.49 percent        +4.16 percent    +2.86 percent

  alcoholic drinks

new cars/trucks:  +0.17 percent    +1.13 percent        -1.61 percent    +0.74 percent

motor vehicle      +0.07 percent    +2.60 percent       +1.94 percent    +1.91 percent

  parts:

appliances:          +0.21 percent    +2.93 percent       +2.43 percent    +2.56 percent

major                   -1.40 percent    +3.95 percent        +3.80 percent    +2.94 percent

  appliances:

laundry                -0.70 percent    +4.00 percent        -1.55 percent      -3.98 percent

  equipment:

non-electric         +0.73 percent –   4.07 percent        -5.22 percent      -1.94 percent

  cookware & tableware:

tools, hardware,   +0.06 percent   +0.12 percent       +0.88 percent     +1.22 percent

  outdoor equipment:

The most revealing comparison is that between the post-tariffs (April, 2018) rate of core inflation (which excludes the historically volatile categories of food and energy) and the inflation rates for the metals-using sectors. And they show that for the 15 metals-using industries tracked, prices rose faster than core inflation in ten – a sign of tariff-led price-hiking.

At the same time, as previously noted, the figures for three of these 10 groups – soups, carbonated drinks, and juices and non-alcoholic drinks – need to be viewed cautiously, because their packages are hardly restricted to metals. Thus my conclusion that the tariff effects have been modest.

And another interesting conclusion emerging from these statistics: the price of laundry equipment is dropping dramatically after surging following the imposition in February, 2018 of a separate set of levies on large household clothes washers and driers. These prices are still way up (by 13.75 percent) since the tariffs began. But the May and June data show unusually rapid price drops. And these decreases are much greater than the slight reduction in these tariffs that began this year.

As for the China tariffs, definitive conclusions remain difficult to draw for several reasons. Chiefly, the first full data month for the relevant duties (for consumer products) is only last October. The goods on the U.S. Trade Representative’s list for those levies are categorized with a classification system different from that used by the Bureau of Labor Statistics in measuring inflation – so the match-ups are far from exact. And the scale of tariff price effects can differ dramatically from product to product because China’s presence in a particular market can vary so greatly.

Another complicating factor (though clearly trade war-related): Some of the China categories have also been affected by the metals tariffs (e.g., auto parts). Further, the appliance categories have been impacted by the separate household laundry equipment duties.

Nonetheless, here’s the China data for May-June, since last October, and year-on-year for this June and last June. As with the metals tariff table, they include figures for control categories like the core inflation rate:

                            May-June       Since Oct.    June y/y 2017-18     June y/y 2018-19

core inflation: +0.22 percent  +1.59 percent   +2.13 percent           +2.26 percent

food:                -0.02 percent   -0.12 percent   +1.43 percent           +1.91 percent

frozen/freeze-  -0.42 percent  +0.52 percent    -0.23 percent            -0.09 percent

  dried prepared foods:

fish/seafood:    -0.74 percent  +0.89 percent   +1.43 percent           +1.66 percent

processed fish/ -0.98 percent         0 percent   +0.39 percent            +2.13 percent

  seafood:

frozen fish/      -1.32 percent   -0.61 percent    -0.91 percent            +1.68 percent

  seafood:

fruits/vegs:      -1.24 percent   +0.03 percent   +0.25 percent             +1.04 percent

fresh fruits/    +1.67 percent    -0.63 percent   +0.62 percent             +0.87 percent

  vegetables:

fresh fruits:      -2.06 percent   -2.49 percent   +1.87 percent             -1.85 percent

fresh vegs:       -1.24 percent   +1.54 percent    -0.82 percent           +4.09 percent

processed        +0.39 percent   +2.49 percent    -1.04 percent           +1.70 percent

  fruits/vegs:

frozen fruits/   +1.84 percent   +0.54 percent    -3.88 percent           +0.24 percent

  vegetables:

non-carb/          -0.21 percent   +0.61 percent   -0.37 percent           +2.71 percent

  non-frozen juices/drinks:

personal care    -0.27 percent    -0.59 percent   -0.30 percent            -0.60 percent

  products:

household         -0.11 percent    +0.13 percent  -7.87 percent            -0.03 percent

  furnishings:

recreation         -0.34 percent     -2.49 percent   -8.22 percent           -5.60 percent

  goods:

men’s                -1.24 percent     -2.94 percent   -0.69 percent          +1.53 percent

  sportswear:

women’s           -2.01 percent     -1.25 percent   -1.33 percent           -0.03 percent

  sportswear

computers,        -1.91 percent    -4.09 percent    -3.70 percent          -5.86 percent

  peripherals, etc.:

window/floor    -1.19 percent    -5.03 percent   +0.43 percent          -2.75 percent

  coverings:

furniture &       +0.82 percent   +2.64 percent   +0.02 percent         +3.15 percent

  bedding:

appliances:       +0.21 percent     -0.37 percent  +1.15 percent         +2.56 percent

major                 -1.40 percent    +0.33 percent  +5.62 percent         +2.94 percent

  appliances:

laundry              -0.70 percent     -0.22 percent +13.12 percent         -3.98 percent

  equipment

misc                 +1.19 percent      -0.84 percent    -1.05 percent        +2.28 percent

  appliances:

non-electric      +0.73 percent      -2.78 percent    -2.64 percent         -1.94 percent

  cookware/tableware:

tools/                +0.06 percent     +1.27 percent    -0.74 percent          +1.06 percent

  hardware &

  outdoor equip:

household          -0.14 percent     +1.14 percent  +0.60 percent          +1.52 percent

  cleaning products:

televisions:        -1.23 percent    -14.25 percent  -19.09 percent        -19.65 percent

misc video         -1.98 percent      -1.19 percent    -2.53 percent          -2.17 percent

  equipment:

pets &               +0.08 percent     +2.72 percent   +0.67 percent         +2.84 percent

  pet products:

sporting           :+0.39 percent     +2.79 percent   +0.07 percent         + 0.66 percent

  goods:

photo equip       +0.24 percent     -2.04 percent    -6.29 percent          +2.72 percent

  & supplies:

sewing              +0.41 percent     +8.21 percent   +7.54 percent          +4.63 percent

  machines/

  fabrics:

motor               +0.14 percent      +2.09 percent   +0.29 percent          +1.91 percent

  vehicle parts:

tires:                 +0.15 percent     +2.09 percent     -1.56 percent          +2.03 percent

stationery/        +0.59 percent     +4.95 percent    +1.16 percent           -1.31 percent

  gift wrap:

Even given the above uncertainties, the bases for claims that the China levies are creating a tariff-mageddon for American consumers look awfully weak, though they’re not nonexistent. Chiefly, since the tariffs’ onset last October, only eight of the 30 affected products saw prices rising faster than core inflation.

At the same time, more product categories seem to be displaying such characteristics. This conclusion seems clear from the two sets of year-on-year statistics. Between June, 2017 and June, 2018, prices were stronger in only three of the 30 categories (including products for which prices were falling at a slower rate). Between the following Junes, their number grew to eight.

Similarly, forgetting about comparisons with the core, 23 of the 30 groups experienced higher inflation rates during the June, 2018-June, 2019 period (largely post-China tariffs) than during the June, 2017-June, 2018 period (entirely pre-China tariffs).

Of course, Mr. Trump’s trade policy, especially regarding China, has never been about economics alone. The administration has repeatedly emphasized that national security is at stake as well. But these new consumer price figures make clear that the economic costs paid by Americans have so far been meager. And especially with overall inflation so weak, they hardly look like reasons for the President to ease up on the trade front.

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

Tags

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

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

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

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

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

                                             April thru March   April thru April   April thru May

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

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

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

machinery:                            +2.31 percent       -0.12 percent       +0.11 percent

automotive:                            -3.10 percent       -3.86 percent        -1.55 percent

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

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

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

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

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

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

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

                                        August thru March   August thru April   August thru May

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

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

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

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

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

   parts

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

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

(What’s Left of) Our Economy: Tariffs-Led Wholesale Price Inflation Going, Going….

Tags

aluminum, China, inflation, metals, metals-using industries, Producer Price Index, steel, tariffs, Trade, trade war, Trump, wholesale prices, {What's Left of) Our Economy

Amid all the recent trade policy-related news, I’ve struggled (unsuccessfully) to keep up with the U.S. inflation data, but kept my nose to the grindstone this week and have now managed to scrutinize the new producer price figures (for May) in detail. These Bureau of Labor Statistics (BLS) figures contain unmistakable signs that whatever tariff-led inflation had begun to be generated in the American wholesale sector has been dramatically dissipating lately – which no doubt has much to do with continuingly weakening core inflation on the consumer side.

As usual, let’s start with the impact of President Trumps metals tariffs, which have lasted the longest (their first full month was April, 2018), and it’s easiest to identify the industries affected, since steel and aluminum-heavy sectors are pretty obvious (along with the metals themselves), and since we’re not dealing with the dependency on metals from any one trade competitor.

And a special bonus: It’s with steel and aluminum prices per se that the loss of any inflationary momentum comes through most clearly. Specifically, after rising 12.37 percent between April and their most recent (September) peak, prices for steel mill shapes fell 6.44 percent through May. As a result, they’re now 5.14 percent higher than during their first tariffs month. In their control group (the processed goods minus foods and feeds – or “core” – super-category) prices rose by 3.41 percent from April through their peak (in October), and have since declined by 2.62 percent. Consequently, they’re now 0.70 percent higher than during the first metals tariffs month.

So although in absolute terms, steel prices remain higher than those in their super-category, they peaked earlier and have come down faster.

Aluminum prices have been much weaker for much longer. After rising by 6.66 percent between April and their (latest) June peak, aluminum mill shapes prices are down by 6.53 percent. As a result, they’re now actually 0.30 percent lower than during their first full tariffs month.

Significantly, signs of markedly decelerating inflation are just as evident in numerous metals-using manufacturing sectors. In past posts on producer price trends, I looked first at industries where price increases since the metals tariffs onset had initially been faster than that for their super-category – final demand goods minus food and energy products.

The table below makes plain that a sizable, widespread slowdown has taken place. The columns show the percentage price changes between April and whichever month saw such prices hit their latest peak; and such changes for such goods since January. In every instance, the percentage changes for the latter have been much smaller than for the former. And in the cases of mining machinery and equipment and construction machinery and equipment, the slowdowns were more dramatic even than that for the super-category (which was awfully dramatic).

                                                               April to peak (month)          Since Jan.

Final demand less food and energy:       +1.73 (May, 2019)              +0.17

pumps/compressors:                               +3.82 (May, 2019)              +0.57

mining mach & equipment:                    +7.52 (April, 2019)            +0.03

construction machinery & equipment:   +5.75 (April, 2019)            +0.04

metal-forming machine tools:                +3.77 (Feb.,2019)              +0.77

But it would be reasonable to counter that four manufacturing sectors are too few to show anything conclusively. So here are results for nine more whose early inflation numbers were stronger than that of the core final demand super-category. Every single one has experienced an inflation slowdown since January, and except for railroad equipment and possibly oil and gas field machinery, all involved several orders of magnitude.

                                                                  April to peak (month)       Since Jan.

agricultural machinery & equipment:        +4.18 (April, 2019)          +0.04

tools, dies, jigs, fixtures, molds:                +2.82 (Feb., 2019)           +0.51

industrial material handling equipment:    +3.83 (May, 2019)          +0.22

oil and gas field machinery:                      +1.99 (March, 2019)       +1.01

household appliances:                               +4.53 (Feb., 2019)          +1.39

lawn & garden equipment:                        +2.19 (May, 2019)          +0.13

truck trailers:                                             +6.96 (May, 2019)          +0.81

aircraft:                                                      +2.20 (May, 2019)         +0.52

railroad equipment                                    +2.76 (March, 2019)      +2.67

For good measure, a slowdown is also occurring for metals-using industries where price increases have been relatively weak since the metals tariffs were imposed, as apparent from the table below: 

                                                                 April to peak (month)    Since Jan.

metal-cutting machine tools:                     +1.75 (May, 2019)        +0.69 

passenger cars:                                          +1.20 (Oct., 2018)         -0.30

heavy trucks:                                             +1.22 (Jan., 2019)           0.00

light trucks:                                                +2.43 (Nov., 2018)       -1.72

motor vehicle parts:                                   +0.71 (April, 2019)      +0.31

travel trailers & campers:                          +2.24 (March, 2018)    +0.42

Switch over to “intermediate demand” goods and you find a broad-based, often dramatic inflation deceleration as well – even though price increases in this super-category have accelerated!

                                                                 April to peak (month)    Since Jan.

core intermediate demand:                       +1.11 (May, 2019)         +1.26

metal containers:                                      +5.01 (May, 2019)         +2.95

fab wire products:                                  +11.49 (March, 2019)     +0.23

non-fluid power valves:                          + 4.01 (May, 2019)        +0.98

bolts, nuts, screws, rivets, washers:        +7.98 (April, 2019)        -0.43

fabricated structural metals products:     +5.10 (May, 2019)        +2.18

hardware:                                                 +5.10 (May, 2019)       +0.49

heating equipment:                                  +6.99 (May, 2019)       +1.85

fluid power equipment:                           +4.54 (May, 2019)       +1.33

mechanical power transmission equip:   +3.73 (May, 2019)      +0.40

A/C & refrigeration equip:                     +4.16 (April, 2019)     +1.37

ball and roller bearings:                          +5.85 (March, 2019)   +2.96

The first Trump China tariffs weren’t imposed until early July, so the sample size is smaller. And as previously noted, it’s relatively difficult identifying their precise effects because the list of tariff-ed sectors uses an industry classification system different from that used by BLS to monitor price changes, and the China content of these products can vary significantly. In addition, the group of tariff-ed goods have grown since then, the level of levies differs widely, and the original duties for many have been increased (not to mention the suspension of this major increase for several months earlier this year.  For the exact phases of the U.S.-China trade war until the latest – May 10 – Trump tariff increase, see here.).

But on this policy front, too, the exact same recent wholesale inflation slowdown is apparent as documented above for metals and metals-using industries. And for goods in the core intermediate demand super-category, the China tariff-affected goods have also seen produce price inflation slow as price inflation for the super-category has sped up. The only exceptions are the transformer category (where the inflation levels have been very low in absolute terms and the speed-up marginal) and possibly the oil and gas field machinery sector (where the monthly inflation rates for the two periods seem to be about the same_. Here, again, are the results for the entire August, 2018-May, 2019 period (covering the full duration of the China tariffs in toto), and for the post-January period.

                                                                              Aug.-May            Since Jan.

core intermediate demand goods:                     -1.85 percent       +1.26 percent

aircraft engines and engine parts:                    +1.32 percent       +0.35 percent

ball bearings:                                                   +4.23 percent       +2.96 percent

electric generators:                                          +2.41 percent       +0.18 percent

medical, surgical & personal aid devices:      +0.94 percent         -0.05 percent

core commodity final demand:                      +1.12 percent          0.00 percent

industrial heating equipment:                        +3.50 percent        +1.85 percent

oil and gas drilling platform parts:                +1.84 percent        +1.01 percent

farm machinery and equipment:                   +2.29 percent           0.00 percent

paper-making machinery:                             +2.92 percent         +0.88 percent

electricity transformers:                                +0.61 percent         +0.70 percent

X-ray and electro-medical equipment:         +0.35 percent          +0.12 percent

It might be an exaggeration to say “If you blinked, you missed tariffs-led inflation in the wholesale economy.” But as the above figures make clear, for now, it’s not much of an exaggeration.

(What’s Left of) Our Economy: Are Trump’s Metals Tariffs Starting to Backfire?

Tags

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

Friday’s monthly U.S. jobs report (covering April) not only included the third straight month of weak manufacturing employment gains. It contained the first notable evidence that President Trump’s tariffs (at least on imports of steel and aluminum) contributed to a payroll slowdown.

Industry created only 4,000 new jobs sequentially in April. The February and March revisions were positive (the latter from an increase of 1,000 to 8,000, and the latter from a decrease of 6,000 to no change. But these single-digit (at best) results represented manufacturing’s poorest three-month employment performance stretch (producing a cumulative net gain of 12,000 since January) since the September-December, 2016 period (when the increase was 11,000).

At least as important, the greatest weakness came in those manufacturing sectors that most heavily use the metals for which tariffs have been imposed by Mr. Trump since April, 2018. Whereas until the April, 2019 data, these industries (the main ones are listed in the table below) were generally creating jobs at a faster pace than less metals-reliant manufacturing sectors and even the private sector economy overall, that out-performance came to an end for the industries where April figures are available.

                                                 Old thru March      New thru March      Thru April

entire private sector:                +1.78 percent          +1.79 percent      +1.98 percent

overall manufacturing:            +1.48 percent          +1.58 percent      +1.61 percent

durable goods:                         +1.85 percent          +1.92 percent      +1.92 percent

fabricated metals products:     +1.60 percent          +1.82 percent      +1.80 percent

non-electrical machinery:       +2.76 percent          +2.68 percent      +2.44 percent

automotive vehicles & parts:  +0.40 percent          +0.42 percent     +0.27 percent

household appliances:              not available           -4.10 percent      not available

aerospace products & parts:     not available          +6.56 percent      not available

In other words, as the private sector and manufacturing in general both generated greater employment increases in April than in March (the latter just barely), the metals-using sectors’ April gains were smaller than March’s, and the durable goods super-sector in which they’re all found could only match its March jobs improvement rate.

Further, one point to bear in mind about the numbers for household appliances. This sector includes the large household laundry machines that saw a separate set of tariffs imposed starting in February, 2018.

As usual, the impact of the President’s tariffs on products made in China are more difficult to judge for at least four reasons. First, an enormous number of manufacturing industries use Chinese inputs – and to greatly varying extents. Second, these levies only began in July, and then on a relatively small scale. Third, the list of products tariff-ed beginning in July matches up imperfectly at best with the sectoral classification scheme used by the Labor Department to track manufacturing employment. And fourth, most of the affected products are found in relatively narrow categories of manufactures, where the jobs data is one month behind.

To muddy the waters further, in late February, the President decided to suspend an increase slated to go into effect March 1 on tariffs that began in late September on $200 billion in imports from China. His stated reason: progress in the bilateral trade talks. The levies were to rise from 10 percent to 25 percent.

This morning, however, came another apparent about-face: Mr. Trump announced that the tariff hike suspension would end this coming Friday, and that 25 percent tariffs would go into effect on the remaining $325 billion worth of imports from China “shortly.”

So with all those provisos, here are the latest available employment statistics for some major manufacturing sectors that use the Chinese parts, components, and materials that have been slapped with tariffs since July. As far as I can tell, no clear trend jumps out.

                                July-Feb     Old July-March    New July-March    July-April

private sector:     +1.11 percent   +1.24 percent      +1.25 percent     +1.44 percent

overall mfg:        +1.00 percent   +0.90 percent      +1.00 percent     +1.03 percent

aircraft engines   +0.93 percent    not available       +1.39 percent      not available

  & engine parts:

industrial            +2.46 percent    not available       +2.46 percent      not available 

  heating equip:

oil & gas            +5.83 percent    not available       + 6.11 percent     not available

  drilling platform parts:

farm mach         +1.67 percent     not available       +0.33 percent     not available

   & equipment:

ball bearings:    +1.82 percent     not available       +1.42 percent      not available

Anyone seeking to evaluate the economic effects of the Trump tariffs in a serious manner should recognize that a useful verdict may not be visible for years. But all trends (and their reversals) begin at specific points in time. Further, until the release of the April jobs numbers, tariff supporters could easily demonstrate that the apocalyptic predictions of tariff opponents had not yet come close to appearing. At least for now, that particular case has become somewhat harder to make.

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

Tags

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

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

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

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

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

                                            April thru Jan.      April thru Feb.     April thru March

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

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

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

machinery:                       +4.33 percent         +2.24 percent         +2.71 percent

automotive:                      – 2.84 percent         -0.58 percent          -3.06 percent

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(What’s Left of) Our Economy: More Signs That U.S. Metals’ Tariffs are Winning

Tags

aluminum, China, metals, overcapacity, steel, tariffs, Trade, transshipment, Trump, World Steel Association, {What's Left of) Our Economy

As known by readers of RealityChek, President Trump’s tariffs on metals have worked out impressively since their imposition in March, 2018. Specifically, domestic output in tariff-ed steel and aluminum has rebounded impressively, and employment has increased, too. Price inflation has been contained. And partly as a result, production and hiring in the metals-using sectors widely predicted to become major victims of these levies generally have outperformed that of the rest of American industry.

But looking at steel production around the world provides additional evidence of the tariffs’ success – and especially of the administration’s widely assailed decision to apply them across-the-board (which numerous product-specific exemptions to be sure) rather than confine them to China. President Trump’s critics argued (correctly) that it was China whose bloated, government-subsidized output was mainly responsible for distorting global steel trade flows and output patterns.

But the Trump administration and domestic steel producers justified the comprehensive approach by claiming that many other steel-making countries were compensating for Chinese pressure on their own steel sectors by ramping up their exports to the wide open U.S. market, or permitting Chinese steel to be sent to the United States after passing through their ports, or some combination of the two (a practice known as transshipment).

The evidence for success on this crucial front comes from the World Steel Association (WSA), an international industry group that claims its members combine to turn out 85 percent of global output. (So there’s no reason to suppose that its findings are unduly influenced by the tariff-supporting domestic U.S. steel sector.)

Each month, the WSA releases steel output data (in volume terms) for 64 countries that it claims account for 99 percent of world production. And as you can see from the table below (calculated from the statistics found here), a stunning change has taken place in global output patterns since the American tariffs’ onset.

Chiefly, the month before the tariffs began, both Chinese steel production and global steel production were both growing considerably faster than America’s on a year-on-year basis. This past February (the last month for which data is available), Chinese output was still outgrowing the world’s as a whole – but so was U.S. steel production.

And as is evident, the American industry has consistently outperformed its collective global counterpart – as well as Chinese steel-makers for the most part – for several months. The clear implication: Because the tariffs have been worldwide in scope, they’ve shut down opportunities for other countries to cope with the China problem at America’s expense.

The figures also demonstrate that Chinese steel output remains feverish despite Beijing’s numerous promises of restraint and capacity cuts. But as long as the other steel-producing countries – many of which are clearly getting squeezed as a result – keep foot-dragging on cooperative efforts to end the Chinese world steel glut, the universal Trump tariffs will keep the United States in the enviable position of being able to say, “Not our problem,” and “mission accomplished.”

Steel output y/y    Feb.        Jan.       Dec.       Nov.       Oct.       Sept         Feb. 18

World                  +4.1%   +1.0%    +4.2%     +5.8%    +5.8%    +4.4%      +3.5%

China                  +9.2%    +4.3%    +8.2%    +10.8%   +9.1%    +7.5%     +5.9%

US                      +4.6%  +11.0%   +12.4%   +11.8%  +10.5%    +9.0%     +0.4%

(What’s Left of) Our Economy: The Fed Just Showed that Tariff Alarmism Needs to Wait (At Least) Another Month

Tags

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

The Federal Reserve’s new industrial production figures (for February) follow a pattern that’s begun to emerge lately. They provide evidence that the domestic U.S. manufacturing sector is shifting into a slower gear. But they offer scarcely any reason to believe that President Trump’s tariff-centric trade policies are behind this possible soft patch.

As usual, let’s start with the data pertaining to the President’s levies on aluminum and steel. These tariffs have been widely reported to have gut punched American industry – allegedly proving that Mr. Trump’s approach to trade has been totally counterproductive. Yet just as usual, the performance of the nation’s main steel-using industries – supposedly the main victim of the tariffs, since the trade curbs saddled them with extra costs for major inputs they use – utterly demolishes such claims.

The table below shows the inflation-adjusted output changes for U.S. manufacturing as a whole and for the leading metals-using sectors. And the time periods of the columns represent the gains or losses reported last month between April (the first full month the metals tariffs were in place) and January; the revised April-January figures released this morning, and the preliminary April-February statistics also put out today.

The message they send couldn’t be clearer. The overall manufacturing slowdown comes through from the deterioration that took place between the April-January and April-February results. In fact, on a monthly basis, real manufacturing output declined by 0.40 percent in February – a weakening that followed a 0.49 percent drop in January.

The metals-using industries (including the durable manufacturing super-category in which they’re all found) all exhibited weaker sequential performance between January and February, too (except for aircraft and parts). But with the exception of autos and parts, and major appliances (which are also laboring under the burden of a separate tariff on large household laundry machines imposed in late January, 2018), since the onset of the metals tariffs, they’ve all grown faster than manufacturing as a whole (which is included as a control group since it contains many sectors that don’t use especially large amounts of metals).

Even more revealing are the differences between the old and new January figures. In every case – including for the laggards – they’ve been revised considerably higher. So their underlying strength still looks impressive, which would make no sense whatever if they were really suffering terribly from the metals tariffs.

                                                   old thru Jan.      new thru Jan.         thru Feb.

overall manufacturing:            +1.20 percent      +1.15 percent    +0.75 percent

durables manufacturing:          +1.65 percent     +1.88 percent    +1.78 percent

fabricated metals products:      +3.19 percent     +3.35 percent    +3.30 percent

machinery:                               +3.87 percent     +4.63 percent    +2.67 percent

automotive:                               -5.18 percent     -3.78 percent     -3.87 percent

major appliances:                      -2.87 percent     -1.42 percent     -1.79 percent

aircraft and parts:                     +6.35 percent    +7.22 percent    +7.98 percent

Because the Trump China tariffs didn’t begin until August, their impact on domestic American industry is much less clear. In addition, the list of goods on which levies were imposed doesn’t compare well with the industrial production figures because they use different systems for classifying manufacturing sectors. Finally, the number of Chinese import categories tariff-ed in starting in August was relatively small – only $50 billion worth.

The table below presents results from industries where the matchups look solid. This time, I’ve added a column that permits comparing the old and new data for the previous month. And as you can see, the numbers are all over the place. The February figures look especially ugly. But in two cases, the January output results have turned out to be stronger than previously reported (especially in industrial heating equipment).

                                                      old Aug.-Jan.      new Aug.-Jan.      Aug.-Feb.

overall manufacturing:                +0.36 percent      +0.31 percent     -0.09 percent

ball bearings:                                -0.09 percent      +0.05 percent     -0.10 percent

industrial heating equipment:       -3.86 percent      -0.40 percent     -4.17 percent

farm machinery and equipment:  +9.12 percent     +9.12 percent   -12.70 percent

Even here, however, so much volatility is evident that withholding judgment is the best approach for now. For example, the February monthly decrease in after-inflation farm machinery output (twenty percent even) was that sector’s worst such performance since January of 2007 (20.54 percent). That’s a more than twelve-year low. Yet the (unrevised) 6.47 percent monthly production improvement in January was the best since last April’s 13.69 percent. Similar volatility can be seen in industrial heating equipment.

So the trade alarmists will have to wait at least another month at least for convincing evidence that the Trump tariffs have backfired big-time against domestic industry. Not that’s stopped them from spreading this wholly false narrative till now.