Following up on our discussion last week on the revival of US manufacturing, the chart above shows that the US is still the world's largest manufacturer. This speaks to the tremendous growth in manufacturing productivity, i.e. the growth in the amount of output from each American worker. We would also point out that since 1990, the US has significantly stretched its lead on both Germany and Japan, the latter's rise during the 1970s and '80s having stalled since 1990, when China's extraordinary transformation into a manufacturing powerhouse began in earnest. Note that the latest US upturn is one of the strongest and how the law of large numbers will require China to consume more of its output.
David Fuller's view I like to see fundamental data in graphic
form and the chart referred to above is certainly very interesting. While US
manufacturing output peaked around 2007 and fell more sharply than at any other
time shown and probably since the 1930s, it has recovered half of the last decade's
decline on the data shown, and probably more when the next update occurs.
As always, one needs to deconstruct the data.
While statistically described as productivity per worker, what we are really talking about is the triumph of technology. The number of manufacturing jobs in the US has fallen significantly since the 1970s and I suspect that a not insubstantial portion of remaining jobs are semi-skilled.
I have also asked Rod Smyth if the US data is a measure of what is actually manufactured within the country, as I would hope, or if it includes all the overseas manufacturing of American Autonomies.
What also stands out on the graph is the exponential growth in Chinese manufacturing which will surely surpass the US in a year or two. I was surprised to see how well Japanese manufacturing has held up and have the same question about whether this includes outsourcing (it does not, see below).
Stop Press: Here is Rod Smyth's reply:
"You are correct. It is United Nations data and comes from US GDP so it is what is made in the USA. Thus it includes foreign auto and other manufacturers making in Ohio/Mississippi/Tennessee etc, but not US manufacturing overseas. That's in the China/ Germany/Japan data. I always get a good reaction when I say that the US is the world's largest manufacturer, people assume the US lost that title long ago. I know you are a big fan of the US manufacturing renaissance so please use freely."