Tags
CCP Virus, coronavirus, COVID 19, durable goods, global financial crisis, Great Recession, manufacturing, nondurable goods, recession, {What's Left of) Our Economy
‘Tis still the season – and it will continue for a while to be the season – for year-end 2022 economic data, and today we’ll examine the list of the production growth winners and losers in domestic manufacturing. The big takeaway is that U.S.-based industry’s output patterns are still being shaped by the fading but ongoing aftermath of the CCP Virus pandemic. The main evidence? The unusual fluctuations in manufacturing ouput.
But before getting to the results from the twenty widest manufacturing categories tracked by the Federal Reserve, let’s review the even bigger picture results, which provide an indication of the dramatic ups and downs experienced recently by industry.
Manufacturing’s overall production last year dipped by 0.41 percent after adjusting for inflation (the measure most closely followed by students of the economy). So by the standard definitions (two straight quarters of contraction) the sector is in recession. Moreover, excepting the peak pandemic year of 2019-20, this latest annual output showing was U.S.-based manufacturers’ weakest since the 2.43 percent yearly drop in 2019.
At the same time, this decrease followed 2021’s 4.19 percent gain in constant dollar manufacturing production – the best such showing since the 6.48 percent registered in 2010, early during the recovery from the Great Recession triggered by the Global Financial Crisis of 2007-08.
Narrowing the focus slightly, production in the durable goods super-category climbed between 2021 and 2022 by 0.85 percent. But that relatively feeble expansion came right after the 4.79 percent price-adjusted growth the previous year – its best such performance since 2011’s 5.96 percent.
In nondurable goods,after-inflation production sank last year by 1.72 percent. But the previous year’s 3.58 percent expansion was the strongest since the 3.89 percent way back in 2004.
Big fluctuations can be seen in the statistics for the aforementioned “Big 20.” In the left-hand column below is how their constant dollar output grew or shrank last year in percentage terms, listed from best to worst. In the right-hand column are the counterpart numbers for 2021, in the same order.
1. aerospace & misc, transportation: 10.87 petroleum and coal products: 13.99
2. apparel and leather goods: 10.11 machinery: 11.98
3. nonmetallic mineral product: 5.69 computer & electronic product: 9.20
4. automotive: 5.05 miscellaneous durable goods: 6.38
5. fabricated metal product: 1.75 chemicals: 6.37
6. miscellaneous durable goods: 1.60 primary metals: 5.87
7. food, beverage and tobaco: 0.11 fabricated metal product: 5.84
8. elec equip, appliances: -0.44 aerospace,misc transportation: 5.39
9. plastic and rubber products -1.07 elec equip., appliances: 5.35
10.printing -1.19 textiles & products: 4.56
11. chemicals: -2.01 furniture: 4.11
12. petroleum & coal products: -2.33 apparel & leather goods: 4.11
13. primary metals: -2.83 printing: 3.26
14. machinery: -2.89 plastics & rubber products: 1.99
15. computer & electronic product: -2.91 paper: 0.90
16. misc.nondurable goods: -3.56 wood product: 0.13
17. furniture: -5.19 nonmetallic mineral product: -0.17
18. wood product: -6.14 food, beverage & tobacco: -0.35
19. paper: -8.23 automotive: -4.29
20. textiles & products: -11.98 misc nondurable goods -6.00
The weakness of 2022 comes through from noting that of these twenty industries, inflation-adjusted production fell in fully 13. In 2021, such losers nubeed only five.
As for the fluctuations, in 2022, the after-inflation growth for five of the twenty were the worst since the Great Recession years of 2008 and 2009: wood product, computer and electronic product, furniture, textiles and products, and paper. And for the latter two, that “worst since the Great Recession” description includes their results for the terrible peak pandemic year 2020. In 2021, no sectors achieved that dubious distinction.
But in 2021, five sectors recorded their best annual price-adjusted production increases since 2010 – the first full year of recovery after the Great Recession: primary metal, fabricated metal product, machinery, computer and electronic product, and electrical equipment and appliances.
From the perspective of today, domestic manufacturing looks like it’s been on a roller-coaster, with 2021 being a sizable leg up followed by a small leg down last year. The big question facing U.S.-based manufacturing (assuming no more pandemics or new conflicts breaking out in Europe or Asia or or other black swan events) is how deep a dive that leg down will become if the broader economy slows meaningfully or falls into a new recession – as domestic industry already has.