US Manufacturing Decline

The month of August showed further signs of a struggling US economy with a decrease in manufacturing.  This was the third month in a row that overall manufacturing in the US has been in decline. A total of 15,000 manufacturing jobs were lost during the month of August with a loss of 8,000 jobs in vehicle parts manufacturing. The US has lost 3.5 million manufacturing jobs since 2002, and as of August, the total number of jobs in manufacturing stands at 11,967,000. With the August jobs report released by the Bureau of Labor Statistics showing an increase of only 96,000 jobs, many questions about the state of the US economy linger on.

The weak performance of the US manufacturing sector mirrors manufacturing developments around the world. With the global economy still in a recession, other countries are experiencing similar economic woes. Chinese manufacturing in the last month was at a nine month low, and its GDP growth of 7.6% in the second quarter of this year compared to a year before was its lowest increase in three years. The Chinese purchasing managers index (PMI), an indicator of financial activity, fell to 49.2, while the American index for August stood at 51.5. A PMI of 50 indicates no change.  The Eurozone showed even greater signs of decline as its composite PMI for all 17 states stood at 46.3 in August.

What does the continual struggle of the US economy tell us about American competitiveness? It is far from clear that it is an indicator of America’s decline relative to other countries. As the numbers above show, the other two major economies in the world, China and the Eurozone, went through similar contractions in the manufacturing sector. What the evidence points to, however, is that we are still in a worldwide economic recession. It should not come as a surprise to anyone that the US economy is still stagnant. With the global economy so integrated, hopes of a stronger US manufacturing sector depends on other countries as well.  With stagnant growth rates affecting a majority of countries in the developed world, these latest numbers on American manufacturing shouldn’t be interpreted as evidence that America is falling behind. The problem with manufacturing jobs will not be alleviated until the global recession comes to an end.  As of right now, there are few signs that an end to the recession is in sight.

Posted by: Samuel Benka

Sources: ReutersThe Wall Street Journal, The Huffington Post

 Photo Credit:  Polar-Polar Tank Trailer ManufacturingCourtesy of Flickr user TruckPR

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News Digest: Pinched

The following is an event summary from a book discussion hosted by the Program on America and the Global Economy on August 8, 2011.

While the current recession is causing millions of Americans real and tangible pain today, the wounds inflicted by the current economic climate may prove to be more long-lasting and damaging than originally thought.  This is the argument espoused by Don Peck in his recently released book, Pinched: How the Great Recession Has Narrowed Our Futures and What We Can Do About It.  The book, which is based upon Peck’s cover story from the March 2010 issue of The Atlantic Magazine, details how the lingering effects of this recession will be felt by those hardest hit for the remainder of their professional lives.  As Peck stated, “[l]ong recessions leave deep, permanent scars on society.”  The event was moderated by Kent Hughes, the Director of the Program on America and the Global Economy.

Peck began by bringing the audience back to the spring of 2009.  Lehman Brothers had collapsed.  TARP (The Troubled Assets Relief Program) had been signed into law by President George W.Bush and the Federal Reserve had been active on a number fronts.  When President Obama was inaugurated in January of 2009, the economy felt as if it were in free fall; some 750,000 jobs were lost in that first month.  The nation was holding its collective breath in an attempt to weather the storm.  Many of the economists Peck spoke with warned that our sigh of relief was premature.

It was during this time that Peck interviewed economists who first told him that this recession will have more than a cursory impact on those adversely affected.  Peck stated that for these individuals “there really was a lifelong impact.”  This lifelong impact was especially felt by the young with limited education who had only recently entered the workforce.  Starting in very difficult circumstances, this group “quite literally never caught up,” Peck argued.

This phenomenon is not unique to the current moment in time.  Peck discussed the recession of the early 1980’s and found that those who entered the workforce during that downturn were still suffering the consequences twenty years later.  Among the issues they faced were the fact that they were disproportionately in non-professional jobs, they were well behind on income, and they clung more tightly to their careers.  As Peck researched further he found that similar experiences were reported throughout American history, including the 1970’s, the end of the gilded age, and, of course, the Great Depression. Read more of this post

Watch Live – Pinched

The live webcast has now concluded.  Please check back for an archived video.

The Program on America and the Global Economy presents:

Pinched: How the Great Recession Has Narrowed our Futures and What We Can Do About It

Monday, August 8, 3:00 – 4:30 pm

An outgrowth of Don Peck’s influential 2010 Atlantic cover story, “How a New Jobless Era Will Transform America,” Pinched details how continuing weakness in the wake of the crash is changing American family, community, politics, and culture — and recommends public actions to restore the country to health and place its economy on firmer footing in future decades.

Larry Summers says of the book, “Every era has its politico-economic text.  Don Peck may well have written the one for the post-financial crisis era. His concerns for what a weak economy will leave in its wake are proper and pressing. We would make wiser policy if every policymaker read this brilliant book.”

Featuring: Don Peck, Features Editor, The Atlantic

Don Peck is a features editor at the Atlantic, where he has worked as an editor for seven years. Mr. Peck handles most of the Atlantic’s coverage of the economy. He has a B.A. in government modified with economics from Dartmouth College and a Masters of Public Affairs with a focus on international development from the Woodrow Wilson School at Princeton University.

Moderated by: Kent Hughes, Director, Program on America and the Global Economy

Please RSVP acceptances only to page@wilsoncenter.org.

Posted by: PAGE Staff

You are Invited – Pinched: How the Great Recession Has Narrowed our Futures and What We Can Do About It

The Program on America and the Global Economy presents:

Pinched: How the Great Recession Has Narrowed our Futures and What We Can Do About It

An outgrowth of Don Peck’s influential 2010 Atlantic cover story, “How a New Jobless Era Will Transform America,” Pinched details how continuing weakness in the wake of the crash is changing American family, community, politics, and culture — and recommends public actions to restore the country to health and place its economy on firmer footing in future decades.

Larry Summers says of the book, “Every era has its politico-economic text.  Don Peck may well have written the one for the post-financial crisis era. His concerns for what a weak economy will leave in its wake are proper and pressing. We would make wiser policy if every policymaker read this brilliant book.”

Featuring: Don Peck, Features Editor, The Atlantic

Don Peck is a features editor at the Atlantic, where he has worked as an editor for seven years. Mr. Peck handles most of the Atlantic’s coverage of the economy. He has a B.A. in government modified with economics from Dartmouth College and a Masters of Public Affairs with a focus on international development from the Woodrow Wilson School at Princeton University.

Moderated by: Kent Hughes, Director, Program on America and the Global Economy

Please RSVP acceptances only to page@wilsoncenter.org.

Posted by: PAGE Staff

The Odd Couple

According to research from McKinsey entitled “Learning to Love Recessions”  recession and innovation may be more linked than one would assume.  The report argues that those who make strategic, long-term, innovative choices during harsher economic climates are best positioned to enjoy greater gains in the long run.  According to Boris Pluskowski, the founder of Complete Innovator, “Winners emerging from this downturn in the economy will develop an innovation strategy that looks at innovation in a very unique way from most companies.  They will see innovation as something that can impact all parts of the business, in short and medium, as well as long-term time frames.”

Posted by: Wesley Milillo

Sources: Manufacturing Trends, McKinsey Quarterly, Completeinnovator.com

Photo credit: Flanders Technology International 1988 courtesy of flickr user FotoBart.