High frequency indicators (PMI, etc.) suggest — and have suggested — a slowdown in manufacturing. Still, other indicators indicate sideways trending. Here’s a picture, incorporating the just-available manufacturing value added for Q2, as well employment incorporating the preliminary benchmark revision.
Figure 1: Manufacturing production (blue, left scale), implied employment from preliminary benchmark (tan, left scale), aggregate hours (green, left scale), and real valued added (red), all in logs, 2021M07=0, and capacity utilization in manufacturing, in % (black, right scale). Source: BLS via FRED, Federal Reserve, BLS, BEA via FRED, NBER.
I do wonder a little about extrapolations from manufacturing to the rest of the economy. While manufacturing might be a leading indicator (that’s dubious), it’s been declining share of overall economic activity for decades.
Figure 2: Log ratio of real manufacturing value added to GDP (blue, left scale), and manufacturing to GDP share (tan, right scale). NBER defined peak-to-trough recession dates shaded gray. Orange shading denotes Trump administration. Source: BEA 2024Q2 release/annual update, NBER, and author’s calculations.
In fact, manufacturing sector value added declined substantially in the wake Trump trade war (even before the pandemic). So, we should be interested in manufacturing to the extent that it’s a large share of the economy (about 10% in value added terms). However, the manufacturing sector could be in recession (however a sectoral recession is defined) without the rest of the economy suffering one (as defined by NBER).
This is soooo Trump:
https://www.msn.com/en-us/news/politics/image-of-donald-trump-walking-through-floodwaters-after-hurricane-helene-is-ai/ar-AA1rxQxa?ocid=msedgntp&pc=U531&cvid=9fa38c1e38a946f68359039765f1faca&ei=22
So we have something that appears to be showing Trump wading through deep flood waters to bring aid to those affected by Helena. What’s that? It wasn’t the real Trump? It was AI generated! Now here’s the big question – was the AI generated Trump tossing out paper towels?
“manufacturing sector value added declined substantially in the wake Trump trade war (even before the pandemic).”
And it has risen under Biden. Huh – I wonder why fake PhD EJ Antoni never mentions this series!
Value Added by Industry: Manufacturing as a Percentage of GDP
https://econbrowser.com/archives/2024/10/manufacturing-in-recession-revisited
This series is available back to 2018 when it was 11% and yes it fell below 10% under Trump. That it rose to only 10.4% and is now at 10% under Biden must be put in perspective as it is a share of GDP. And we know real GDP has risen quite a bit since Biden took office.
I’m gonna keep linking to this picture as long as people keep missing the point:
https://fred.stlouisfed.org/series/DGDSRX1
Talking to you, recession mongers. Goods consumption jumped during the Covid lock-down and has never fallen back to the previous trend. Manufacturing is flattening out at a very high level. Here’s what shipments look like:
https://fred.stlouisfed.org/series/AMTMVS
Funny how recession mongers pick 50-year-ago end-points one day, year-ago end-points the next, with no real concern for economic reality.
Iran has launched just shy of 200 missiles at Israel. No word yet on how many arrived or on damage.
Reports are of ballistic missiles. Our Cold War history an give a misleading impression. “Ballistic” is anything that describes a parabola in flight, typically without propulsion in the final stages of flight. No implication for the power of the weapon. In fact, ballistic missiles can be easier to intercept than cruise missiles.
The U.S. has, of course, offered to help shoot down missiles, just like last time.
I don’t have a good handle on motivations here. We’ve been told by all and sundry since the beginning of Israel’s war on Palestine that Iran isn’t interested in escalation. Tit for tat reactions, to maintain credibility, has been Iran’s game. Israel has recently assassinated Iranian allies and has now gone to war with one of Iran’s most powerful and longstanding proxies.
What’s the calculation now? Don’t know. I’m sure we’ll hear from lots of people who’ll pretend they do.