Manufacturing Renaissance Flowers Under Trump
One of the main reasons I voted for Trump was because I expected he would enact policies that would lead us to something like a real economic recovery, particularly in the United States’ enervated manufacturing sector, and in that he hasn’t disappointed.
Even his critics are grudgingly giving him some credit:
The manufacturing mini-renaissance continues. Over the past year, according to today’s employment report from the Bureau of Labor Statistics, the sector has added 222,000 jobs, resuming a recovery that had paused in 2015 and 2016 amid strength in the dollar and weakness in the U.S. oil and gas industry.
As is somewhat apparent from the previous chart and is clear in the next one, the rate of manufacturing job gains has accelerated in the past few months. It’s also looking quite strong by the standards of the past three decades.
Still, that’s higher than manufacturing’s 8.5 percent share of total nonfarm payroll employment. The manufacturing sector is adding jobs at a faster pace than the rest of the economy, which hasn’t happened much over the past half century. Manufacturing jobs pay better than other jobs ($900.55 in average weekly earnings for production and non-supervisory employees in February, versus $757.12 for the private sector as a whole). They also tend to have multiplier effects that most service jobs don’t, creating other jobs and income in their wake. So a booming manufacturing sector is a very good thing.
What’s changed? Here’s a quick list:
As already mentioned, the domestic oil and gas industry is back to growing, after a brief swoon.
The rest of the global economy, especially Europe, is much stronger than it was two years ago.
The dollar has been weakening, making American-made products cheaper abroad.
Business taxes in the U.S. just got cut, by a lot.
Congressional Republicans have stopped caring about the budget deficit.
There’s some guy in the White House now who talks about manufacturing a lot.
The role of President Donald Trump in all this is something of a contentious topic. He did sign the Tax Cuts and Jobs Act into law, which if Hillary Clinton had been elected would not have happened. I tend to think the tax act will have lots of not-so-great medium-to-long-term consequences, but it would be churlish to deny it any credit for what’s happening in manufacturing now. Also, with a Republican in the White House, congressional Republicans have generally stopped trying to slow down growth with debt-ceiling brinkmanship and budget cuts.