(What’s Left of) Our Economy: A Spring-y New U.S. Manufacturing Production Report

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aerospace, automotive, Biden, Boeing, CCP Virus, coronavirus, COVID 19, Donald Trump, Federal Reserve, health security, imports, industrial production, inflation-adjusted output, infrastructure, machinery, manufacturing, pharmaceuticals, PPE, real growth, semiconductor shortage, stimulus, supply chain, tariffs, Trade, trade war, vaccines, ventilators, West Coast ports, Wuhan virus, {What's Left of) Our Economy

You might call today’s March U.S. manufacturing production figures from the Federal Reserve a good news/bad news/good news story. Moreover, the new data on inflation-adjusted factory output contained a surprise worth noting.

First the good news/bad news/good news. The Fed report showed that real domestic manufacturing output rose by 2.79 percent on month in March. That was the best such result since July’s 4.25 percent – much earlier during the recovery from the deep CCP Virus- and lockdowns-induced recession. Rebounds from major downturns tend to be strongest earliest, especially for highly cyclical sectors of the economy like manufacturing, and that surely went double for a slump largely caused by an outside shock like a pandemic and dramatic government responses, rather than one caused by a market-based economy’s ordinary fluctuations.

The bad news was that this robust growth followed a February sequential drop of 3.72 percent that was the worst monthly performance since pandemicky April’s 15.83 percent plunge. Moreover, this revised February figure was a significant downgrade from the initially reported 3.12 percent decline. The other revisions, going back to October, were too small to affect the picture over the last few months.

But then there’s that second piece of good news: As the Fed’s release explained this morning, the lousy February numbers “largely resulted from widespread outages related to severe winter weather in the south central region of the country.” So they stemmed from a (temporary) outside shock, too.

The surprise? Although the U.S. automotive industry continues reducing production due to a global shortage of semiconductors, output in price-adjusted terms grew by 2.79 percent sequentially in March. At the same time, the February fall-off was revised down from 8.26 percent to ten percent even. And the shortage is expected to undercut vehicle production until the fall, so that’s a drag likely to weigh on the overall manufacturing figures for months.

The total March manufacturing figure means that domestic industry’s after-inflation production has grown by 22.88 percent since its recent low-point last April, and has climbed back to within 1.73 percent of its last pre-pandemic reading in February, 2020.

Manufacturing’s monthly current dollar output gains were broadbased in March, including in the crucial machinery sector. In this industry, whose products are widely used not only throughout manufacturing, but in many other important segments of the economy like construction and agriculture, price-adjusted production improved by 2.87 percent. And now it actually stands 2.16 percent higher than during that last pre-CCP Virus month of February, 2020.

Although the semiconductor shortage is bound to crimp production in many industries on top of automotive, domestic manufacturing still seems to be benefiting from two headwinds other than the economy’s generally improving strength that seem to have some staying power, too. The first is aerospace giant Boeing’s continuing, but sometimes uneven, progress exiting its protracted recent safety and manufacturing problems. The pandemic’s blow to air travel worldwide clearly didn’t help, either.

But in March, real output in aircraft and parts jumped by 4.09 percent sequentially, and is now fully 5.07 percent above its February, 2020 pre-CCP Virus level.

The picture was more mixed in the pharmaceutical and medicines category – which includes vaccines. Inflation-adjusted output advanced by 2.90 percent on month in March, but the previously reported January and February numbers were both downgraded dramatically – from an upwardly revised 2.57 percent to 0.85 percent, and from a 1.29 percent rise to a 0.05 percent dip. These moves left the sector’s output 5.83 percent higher than in pre-pandemic February, 2020 with the prospect of more impovement to come as vaccine production continues to boom.

Growth is still lagging, however, in the vital medical equipment and supplies sector – which includes virus-fighting items like face masks, face masks, protective gowns, and ventilators. February’s constant-dollar production was revised up from a 0.56 percent monthly decline to a 0.44 percent drop – but it was still a drop. Growth returned in March – but only by 0.61 percent in real terms. So price-adjusted output in this category – which includes many other products – is still slightly (0.39 percent) below pre-pandemic February, 2020’s levels, despite all the national talk of the need to improve America’s health security.

I’m still bullish on manufacturing’s outlook, though. No one should forget headwinds facing industry aside from the semiconductor shortage – chiefly, the fading of vaccine production at some point, the distinct possibility of many more regulations and higher taxes from a Democratic-conrolled federal government, and the supply chain disruptions resulting largely from clogged West Coast ports (which on top of the Trump tariffs are slowing the import of many foreign inputs still needed by Made in the USA companies).

But arguably more than offsetting these dangers is the so far better-than-expected resumption of total U.S. growth, the virtual certainty of even yet another gigantic dose of stimulus an infrastructure spending, along with President Biden’s decision to retain every dollar’s worth of those sweeping, often towering Trump trade curbs.

Yet much more important than my views is the continuing optimism registered by domestic manufacturers in all of the soft data surveys that come out each month from the private sector and from various branches of the Federal Reserve system. If they’re full of confidence, who am I to rain on their parade?

Im-Politic: Crucial New Info on U.S. Pharmaceutical Supply Chain Weaknesses

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active pharmaceutical ingredients, Bain & Company, CCP Virus, China, coronavirus, COVID 19, Cytiva, FDA, Food and Drug Administration, health security, Im-Politic, offshoring, pharmaceuticals, supply chain, Wuhan virus

Here’s a post full of data that should be of more than a little interest to folks who aren’t data geeks. That’s because it presents information shedding light on the likelihood of America getting caught dangerously short of key medical supplies – in this case, pharmaceuticals – when the next pandemic hits. As usual with CCP Virus-related info nowadays, it contains some good news and some findings that aren’t so encouraging.

First, some background. The surveys cited here underscore just how much offshoring of drugs and their chemical building blocks has taken place in the years – and possibly decades – before the pandemic. A poll of pharmaceutical executives the world over conducted by the U.S. life sciences company Cytiva found that 51 percent of the former “say that drug shortages increased in their domestic market during the pandemic, although 33% say that the issue had been increasing over the past five years.”

In other words, a series of “underlying issues around supply chain resilience…have been exacerbated — but not caused — by the pandemic.”  

In this vein, Cytiva also found that fluctuating demand is only part of the shortage problem: “About half of the executives and policymakers surveyed (47%) say their country is moderately or highly dependent on the import of drugs,” and nowhere is this problem more worrisome than with those drug building blocks, since “China and India in particular have become the epicentres of production for the generics and active pharmaceutical ingredients (APIs) that form so much of the industry’s output.”

Moreover, according to a study last fall by the American consulting firm Bain & Company, the API production picture is increasingly dominated by China. All by itself, the People’s Republic accounted for 39 percent of global output last year, up from 17 percent ten years ago. Meanwhile, the North American share has fallen from 23 percent to 19 percent.

Bain also draws a direct link between the shift of drug industry output to the developing world and the frequency of U.S. shortages:

“The transfer of pharma sourcing and manufacturing to Asia has directly affected supply chain reliability. FDA [U.S. Food and Drug Administration] data shows an increase in drug shortages [shown in the chart above] resulting from several factors, including quality issues and disruptive events, such as the 2017 fire at a Chinese API producer that led to a global shortage of piperacillin/tazobactam.”

And indirectly responsible for these shortages have been industry features like “The winner-take-all generic pharmaceutical bidding process in Germany….” This system has “produced drug shortages by reducing the number of producers or bidders over time. In some cases, for example, the winners were sales offices dependent on foreign third-party manufacturers incapable of delivering high drug volumes.”

This finding, in turn, adds to the evidence that the pharmaceutical supply chain security issue predates the current pandemic, and that the industry has been slow to respond. In fact, Bain specifies that the CCP Virus outbreak and its effects weren’t “the first warning. Tsunamis wrecked pharma manufacturing facilities in Asia in 2011 and 2012, and in 2017, Hurricane Maria knocked out Puerto Rico’s electricity supply, disabling many of the nearly 50 pharmaceutical plants on the island for months.”

Moreover, RealityChek readers might remember the post reporting that in 2011, a U.S. Commerce Department study discovered not only that troubling pharmaceutical supply chain vulnerabilities had developed, but that the companies themselves were pretty blasé about the problem.

Like I said at the outset, however, the pharmaceutical supply chain news is by no means all discouraging. The Cytiva survey found that 59 percent of the executives “say that the era of offshoring drug manufacturing to low-cost countries is over, and 67% say that the manufacturing of biopharma staples such as biologics would dramatically increase in their own countries over the next three years.” And given the U.S. industry’s global prominence, it seems safe to assume that many of these executives work at American-owned firms.

In addition, the Biden administration has designated improving health security as a high priority – although as I’ve reported, the President’s plans so far seek to treat as reliable suppliers many countries that have curbed or outright banned exports of medical supplies during the height of the pandemic. And these nationalistic impulses clearly are alive today in the pandemic era’s current “vaccine phase”

Finally, a big shout out to the Cytiva folks for including a URL for the aformentioned FDA shortage database – which I’ve been trying to find for months. It’s not only searchable, but it’s updated daily.

Glad I Didn’t Say That! Free Trade Bolsters Security…Except When it Counts?

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CCP Virus, coronavirus, COVID 19, export bans, free trade, Glad I Didn't Say That!, health security, medical devices, national security, PPE, protectionism, supply chain, The Washington Post, Trade, Washington Post, Wuhan virus

“Mutually beneficial exchange among countries,

conducted freely within a legal framework, is the path to

maximum security, economic and strategic. Autarky, by

contrast, is a dead end.” 

 

– The Washington Post, February 25, 2021

 

“As demand soared for masks and gloves, more than 100

countries and territories imposed export restrictions on

coronavirus-fighting essentials, according to the

International Trade Center.”

 

– The Washington Post, February 10, 2021

 

(Sources:  “America needs to shore up its supply chains. That shouldn’t become an excuse for protectionism,” Editorial Board, The Washington Post, February 25, 2021, https://www.washingtonpost.com/opinions/biden-trade-supply-chain-protectionism/2021/02/25/3dd0a164-7787-11eb-948d-19472e683521_story.html and “Trump  tried to block her. Now Ngozi-Iweala is about to make history,” by Danielle Paquette and David J. Lynch, ibid., February 10, 2021, https://www.washingtonpost.com/world/africa/ngozi-okonjo-iweala-wto/2021/02/09/99e3b028-67eb-11eb-bab8-707f8769d785_story.html) 

 

 

 

 

Making News: China Policy Blueprints Critique Re-Posted in The National Interest

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alliances, allies, Asia, Biden, CCP, China, China Strategy Group, Chinese Communist Party, decoupling, Donald Trump, Making News, multilateralism, NationalInterest.org, sanctions, semiconductors, Silicon Valley, supply chain, tariffs, Trade, trade war, XiJinping

I’m pleased to announce that The National Interest has republished as a single article my recent blog posts detailing the major flaws of two blueprints for China policy that have just been offered to the Biden administration from establishment thinkers. In case you missed them the first time around, or want to re-read, here’s the link.

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

Our So-Called Foreign Policy: Why Scalpels Won’t Cut it Against China

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Biden, China, China Strategy Group, decoupling, Donald Trump, Eric Schmidt, EU, European Union, FDI, foreign direct investment, Germany, Google, health security, Made in America, manufacturing, multilateralism, national security, Our So-Called Foreign Policy, semiconductors, Silicon Valley, supply chain, Taiwan, technology

Yesterday’s RealityChek post argued made clear that one of the two recent blueprints for China policy offered to President Biden from the foreign policy and technology establishments suffered from crippling internal contradictions.

The second effort, from the Silicon Valley-dominated “China Strategy Group,” can be read more profitably by the President, because popping up here and there are some insights that are genuinely valuable especially since they come from analysts once strongly supportive of what they themselves call the pre-Trump strategy of “near-unbounded integration.”

Principally, the group, which notably is co-chaired by Google co-founder Eric Schmidt, calls for recognizing that “some degree of [U.S.-China] disentangling is both inevitable and preferable. In fact, trends in both countries—and many of the tools at our disposal—inherently and necessarily push toward some degree of bifurcation.” In other words, it’s endorsed a limited version of what’s now commonly called economic and technological decoupling.

In addition, it argues that both this decoupling, along with tariffs that it acknowledges may be needed to push back against certain Chinese offenses and provocations, should be pursued even though they will entail costs – a refreshing and crucially important departure from the long-time pre- and post-Trump consensus in the mainstream American political, business and policy communities that any increased consumer or producer price, or loss of even a smidgeon of market share in China resulting from retaliation from Beijing, proves conclusively the folly of placin any significant curbs on doing business with the People’s Republic.

Finally, the group points out that efforts to rebuild domestic supply chains to reduce reliance on China for critical goods must involve “more than a focus on the end products. Safeguarding key technologies requires the United States to define and secure the entire ecosystem of production, from fabrication to supply to talent to cutting-edge innovation.” In other words, Washington can’t simply seek to become self-sufficient, or largely so, in face masks or ventilators or semiconductors. It needs to become self-sufficient or largely so in all the materials, parts, and components required to make these products.

Yet many of these important insights (and useful recommendations for restructuring the U.S. government to foster the competition with China more effectively) are kneecapped by equivocation and a resulting failure to understand that sometimes policy scalpels cut too finely, and some policy needles are too small to be threaded – especially considering the “all of society” drive China’s totalitarian system is making to gain global technology leadership, and the dangers to America’s “security, prosperity, and way of life” Chinese success would create.

For example, the group emphasizes that decoupling policy mustn’t invite “escalatory cycles of confrontation, retaliation, or unintended conflict” or overlook those areas “where cooperation, collaboration, and exchange with China is in our interest, as severing ties and closing off the United States to the ideas, people, technologies, and supply chains necessary to compete effectively will undermine U.S. innovation.” At the same time, the authors acknowledge that China will respond to any further U.S. decoupling moves “more aggressively” precisely because “China’s leaders understand U.S. dependency as an important source of leverage.”

So although in principle, this omelet can be made without breaking many eggs, Beijing won’t be cooperating in fact. And the circle can’t be squared with clever phrase-making like “navigating the asymmetric competition” that look satisfactorily reassuring on paper and in speeches to conferences but that need to survive the body blows that will inevitably be delivered by reality.

The group’s approach to Chinese investment in the United States (whether in the form of creating new businesses or taking over or contributing capital to existing firms) illustrates the other big drawback of granular approaches when it comes to China: They ignore how any Chinese entity big enough to play in any foreign market, and especially America’s, is under Beijing’s thumb in every important respect.

As a result, there’s no point in taking the time and expending the resources to follow the group’s recommendations to figure out which Chinese tech platforms (whose importance it emphasizes) are and are not violating American privacy standards or conducting misinformation campaigns dangerous to democracy, or censoring content Chinese authorities don’t like, or helping suppress human rights in China or anywherer else, or stealing valuable data, or helping terrorists and criminals launder money; or whether these activities matter enough to merit official U.S. attention, or whether troublesome practices can be negotiated away through talks with Beijing on technical and other fixes.

In this instance, Washington should stay out of the black holes of setting priorities and especially monitoring and enforcing agreements, and assume that by simply banning these platforms from operating in the United States and in fact prohibiting all Chinese entities from owning U.S. hard assets. The latter step would add the benefit of shielding participants in America’s economy from competition with subsidized, market-distorting outfits from China. At the very least, Chinese entities should be required to prove that they’re not controlled or subsidized in any way by Beijing, or engaged in the above malign activities, before gaining entry.

In addition, despite the group’s understanding that entire manufacturing eco-systems, not just final products, need to be rebuilt and nurtured to ensure supply chain security, it appears to underestimate just how widely these relationships extend. After all, most of the numerous inputs to goods like mechanical ventilators (like its controls, power sources, monitors, and alarm systems) depend on big and complex supply chain and manufacturing eco-systems themselves.

Further, just as before the pandemic, few expected face masks and surgical gloves to become products vitally important to the nation’s well-being, the list of critical goods is likely to change and grow over time as new threats emerge. Therefore, the group is correct in warning that “any product or service could be termed essential to national security in an extreme hypothetical.” But what’s the basis for confidence that many products or services can safely be ruled out, and that such hypotheticals will always remain extreme?

At least as important, like the Biden administration, the group’s determination not to ruffle too many international feathers has also clearly led it to back the notion that the definition of “Made in America” for supply chain purposes should actually mean, “Also Made in Lots of Other Countries” that it considers trusted suppliers. Unfortunately, many of the countries so classified imposed export controls on critical medical goods during the pandemic’s first wave last spring. That is, when cooperation was most needed, they built walls – meaning that their trustworthiness isn’t exactly ironclad.

And as then President-elect Biden learned when the European Union rebuffed his entreaty to consult with Washington before signing an investment agreement with China, the allies remain determined to fence sit in the U.S.-China technology competition. The group acknowledges that the list of anti-China partners “may include all of the [European Union], though in some cases EU position/member states’ positions are too ambiguous today with respect to China for inclusion in all instances, and members may need to be considered on an individual basis.” But simply stating this position and its EU-splitting ambitions is enough to make clear its absurdity – especially since the EU country most reluctant to cooperate against China is economic kingpin Germany.

None of this is to say that all trade with (as opposed to investment in hard assets from) China should be cut off completely, or that international cooperation can be of no use to the United States in its struggle versus the People’s Republic. In particular, (and due largely to recklessly indiscriminate free trade policies), America urgently needs products and knowhow now dominated by foreign producers (notably Taiwan’s semiconductor manufacturing industry, and Japanese and Dutch suppliers of key microchip production equipment and materials). And if other countries are willing to cooperate with Washington on various China containing initiatives at acceptable prices, more help is indeed better than less. But the United States will never safeguard its interests adequately without realizing that multilateralism can’t be an end in and of itself, and that against monumental threats, axes are usually more effective than scalpels.

Those Stubborn Facts: A Strange Definition of a Broken Trump Promise

Tags

Associated Press, CCP Virus, coronavirus, COVID 19, health security, Mainstream Media, manufacturing, masks, medical supplies, PPE, supply chain, textiles, Those Stiubborn Facts, Trump, Wuhan virus

“Shortages of meltblown textiles, key to N95 mask-making, illustrate ‘the failure of this administration to take necessary steps to fulfill’ its promise of restoring critical manufacturing capacity lost to China.”

– Associated Press, September 10, 2020

“Pre-pandemic, five U.S. producers were making about 42 million N95 masks a month. By October, that is projected to have increased to 11 U.S. producers making 168 million a month, which could amount to 2 billion a year….”

–Associated Press, September 10, 2020

“Also pre-pandemic, 24 U.S. companies were making meltblown, with 79 machine lines in operation….But only a fraction of that was going into medical respirators….By the end of 2021… there will be 28 new lines in the U.S., representing a 35% increase, with almost all of the newly produced textile going into medical supplies.”

–Associated Press, September 10, 2020

(Source: “Scarcity of key material squeezes medical mask manufacturing, by Martha Mendoza, Juliet Linderman, Thomas Peipert, and Irena Hwang,” Associated Press, September 10, 2020, https://apnews.com/02a0542e8a05176bd5d79757134bc277)

Those Stubborn Facts: China’s Losing the Trade Wars Globally, Too

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China, exports, Financial Times, globalization, supply chain, Those Stubborn Facts, Trade, trade wars

China’s share of total world goods exports, 2018: 25 percent

China’s share of total world goods exports, 2019: 22 percent

(Source: “China’s share of global exports falls in supply chains rethink,” by Kathrin Hille, Financial Times, August 17, 2020, https://www.ft.com/content/bfef2854-f8f3-4ce6-a00f-3b11123b01e8)

Making News: Podcast Now On-Line of National Radio Interview on the Virus & the Economy

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CCP Virus, China, coronavirus, COVID 19, Making News, manufacturing, Market Wrap with Moe Ansari, supply chain, Trade, Wuhan virus

I’m pleased to announce that a podcast is now on-line of an interview I did yesterday on Moe Ansari’s nationally syndicated radio show.  Click here to listen to a timely, informative session on the CCP Virus’ impact on the economy going forward, with a special focus on trade, China, and manufacturing issues.  The segment comes on at about the 23:50 mark.

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

(What’s Left of) Our Economy: Great New Developments on the U.S.-China Decoupling Front

Tags

CCP Virus, Census Bureau, China, coronavirus, COVID 19, decoupling, FDI, foreign direct investment, GDP, goods trade, gross domestic product, National Committee on U.S.-China Relations, Rhodium Group, supply chain, tariffs, Trade, Trump, venture capital, Wuhan virus, {What's Left of) Our Economy

Amid the flood of terrible news that’s been engulfing the U.S. economy because of the CCP Virus and its shutdown effects, there’s a decidedly positive development to report: Major evidence has just come in showing that the decoupling of the U.S. economy from China’s keeps proceeding. And, even better, the data make clear that the United States is amply capable of prospering without extensive ties with (and resulting vulnerabilities to) the increasingly hostile and dangerous regime in Beijing.

The latest evidence for such conclusions about the so-called decoupling process comes from a study just jointly released by a research firm called the Rhodium Group and a pillar of the Offshoring Lobby called the National Committee on U.S.-China Relations. The real work was done by the folks at Rhodium, and the big takeaways are:

>that the value of Chinese “foreign direct investment” (FDI) in the United States (i.e., Chinese takeovers or acquisition of stakes in existing non-financial assets in the United States, and creation of new non-financial assets) fell slightly on year last year to its lowest annual level ($4.78 billion) since 2010, and is now nearly 90 percent below its peak annual level of $46.49 billion in 2016;

>that the value of Chinese “venture capital” investment (a strange term for originating in the state-controlled Chinese economy) going into the United States fell from its all-time high of $4.67 billion in 2018 to $2.57 billion last year;

>that the value of U.S. FDI made into the Chinese economy edged up sequentially last year, from $12.89 billion to $14.13 billion, but still remains well below its peak of $20.94 billion in 2008;

>and that the value of U.S. venture capital investment going into China plummeted from its all-time high of $19.57 billion in 2018 to $4.98 billion in last year.

Even if you’re not concerned about greater integration with a country that’s threatened cut off vital medical supplies to the United States during the current pandemic, or about the national security threat posed by Chinese access to defense- or surveillance- or hacking-related tech, this is great news for anyone valuing the benefits of free markets. For any participation by China’s state-controlled system in the U.S. economy can only distort the workings of free markets, and in particular, force U.S. businesses (which until the CCP Virus invaded needed to rely on private sources for their capital) to compete with Chinese rivals (which can rely on the Chinese treasury).

Rhodium’s research also found that Chinese investment flows into the United States plunged even further during the first quarter of this year (the first pandemic quarter) while U.S. flows into China remained pretty stable. But the pre-CCP Virus results are undoubtedly more revealing of the underlying longer-term trends.

Decoupling is proceeding even faster on the trade front. Last week’s monthly U.S. trade report from the Census Bureau (for March) showed that the two-way value of U.S.-China trade in goods (the sum of imports and exports) sank by 42.49 percent between the first quarter of 2019 and the first quarter of 2020. That’s the lowest quarterly level since the $72.16 billion level recorded for the first quarter of 2006.

More revealing, though: At that point, two-way goods trade represented 0.53 percent of the total U.S. economy. In the first quarter of 2020, the proportion was down to 0.35 percent.

Of course, the first quarter 2020 results have been distorted by the CCP Virus’ effects (and greater distortion surely lies ahead). More specifically, gross domestic product (GDP) decreased from the fourth quarter of last year to the first quarter of this year, and it grew a measly 2.10 percent before adjusting for inflation over the fourth quarter of 2019. (This and the following growth figures are different, and higher, than the growth figures featured in the most widely tracked GDP figures, which are adjusted for price changes. I’m using the pre-inflation GDP figures here because inflation-adjusted country-specific trade figures aren’t available.)

For more “normal” data, let’s check out the figures for the year preceding the fourth quarter of 2019. During that timespan, the value of two-way U.S.-China goods trade dropped by 19.48 percent – from $171.57 billion to $138.15 billion. But pre-inflation growth hit a solid 3.98 percent.

Slightly shifting the time periods examined produces the same pattern. Between the first quarter of 2018 and the first quarter of 2019, the value of two-way U.S.-China goods trade nosedived by 46.40 percent. In other words, it was cut nearly in half. Yet current dollar growth during that period hit 4.64 percent.

At this point, it’s necessary to point out that this big 2018-19 decline in the value of two-way goods trade came right on the heels of a huge 77.58 percent increase between 2017 and 2018. But this rise stemmed mainly from the major adjustments made by businesses on both sides of the Pacific – especially what’s called U.S. tariff “front-running” – to deal with President Trump’s steadily escalating increases in tariffs on imports from China.

The justification for confidence that, but for the virus’ impact, the New Normal in U.S.-China trade would be reflecting more decoupling comes from examining the trends before and after President Trump’s January, 2017 inauguration. From the time Mr. Trump entered office through the end of last year, the economy grew by a total of 13.23 percent. But the value of two-way bilateral goods trade became 0.32 percent higher. In other words, for all intents and purposes, it didn’t grow at all.

That marks a major turnaround from the eight years under former President Obama, when the only first-quarter-to-first-quarter shrinkage in two-way trade (7.35 percent, between 2015 and 2016) was accompanied by weak 2.45 percent GDP growth. Moreover the only Obama first-quarter-to-first-quarter period when strong GDP growth (5.14 percent) was accompanied by only relatively modest growth in two-way bilateral trade (5.28 percent) came between 2014 and 2015. For the rest of his term in office, the growth of two-way U.S.-China goods trade significantly topped the growth of the economy, before taking inflation into account.

One of the most important concepts in free market-oriented economics is that of trade-offs, often expressed with the phrase, “There’s no such thing as a free lunch.”  Decoupling America’s economy from China’s will no doubt entail further disruption and costs related to the inevitable inefficiencies of supply chain rejiggering.  But the U.S.’ ability to grow strongly even as its economic engagement with China shrivels adds to the evidence that this lunch, if not exactly free, is a terrific value.

Following Up: More Data on America’s Dependence on Foreign Healthcare Goods

Tags

Barack Obama, Department of Health and Human Services, facemasks, Following Up, George W. Bush, health security, healthcare goods, imports, Lena H. Sun, manufacturing, masks, Mike Bowen, Prestige Ameritech, Rachel Siegel, supply chain, The American Conservative, Trump, Washington Post

Since news organizations can be so unreliable, I always do whatever I can to use information from primary sources instead of items in the media. I’m making an exception this morning, however, because I’ve failed to find a government document mentioned in several news articles, and reportedly it contains such important data that it deserves mention. Specifically, this document seems to add vital detail to my recent description in The American Conservative of how extensively the United States relies on foreign sources for crucial health care goods, and how long this gaping hole in the nation’s healthcare security has existed.

The document I can’t find has been described in this Washington Post piece as “a 2014 briefing released by the Office of the Assistant Secretary for Preparedness and Response in the U.S. Department of Health and Human Services.” Among its findings, according to Post correspondents Lena J. Sun and Rachel Siegel:

“Up to 95 percent of surgical masks are made outside the continental United States, in places like China and Mexico….”

The 2014 date, of course, is revealing in that it was two years before Donald Trump was elected President. Also revealing: The authors interviewed a domestic mask manufacturer who showed them letters he’s written to American Presidents warning that mask availability could be disrupted during a pandemic outbreak.

The first was written to Barack Obama in 2010. And apparently little or nothing was done. But the manufacturer, Mike Bowen of Texas-based Prestige Ameritech, says he reached out to George W. Bush’s administration as well – with the same results.

But just in case you think this is an establishment-bashing exercise, it’s important to note also that Bowen says he sent the same warning in 2017 – when Mr. Trump did occupy the Oval Office.

Contrary to much (self-serving) conventional wisdom, I’m not at all opposed to finger-pointing and blame-casting, even during a crisis. In fact, I view it as critical to ensuring that mistakes aren’t repeated. But I am opposed to cherry-picking finger-pointing. Because by now it should be abundantly clear that when it comes to U.S. national leaders and American health security, both Democrats and Republicans and liberals and conservatives and even populists have let the country down.

And the faster all partisans get off their high horses and focus on identifying lessons that need to be learned regardless of political effect, the faster Americans will overcome this crisis and the lower the chances of a rerun.