Welcome to the U.S. Manufacturing Renaissance
Business Insider -- "Investment Bank Jeffries' Chief Equity Strategist Sean Darby predicts a U.S. industrial renaissance "through a combination of higher wage inflation overseas, a weaker U.S. dollar and better productivity gains."
The most important factor in U.S. competitiveness may be a decline in Chinese competitiveness:
The labor comparative gap that China has had has disappeared because the total costs of production for certain products have moved towards US costs. This is particular where labor costs are a smaller proportion of the total costs. Although readers may be feel that it is an exaggeration to claim that ‘off-shoring’ will immediately be reversed back to ‘on-shoring’, perhaps it is better to suggest that the ‘hollowing out’ of US manufacturing has reached its nadir. The worst of the transition is behind the US all other factors of production being equal. The important driver will be speed of productivity gains between the two countries that encourages CEOs to open and close plants in one or the other, not just the labour cost.Industries like agriculture, coal and mining, oil, aerospace and autos have already shown better growth than people realize (see chart above).
Jefferies is bullish on the U.S. economy too, expecting 2.5% GDP growth next year, strong enough to save the world from a Europe-led Armageddon. Last year Jefferies had the most accurate equity team on Wall Street."
MP: The chart above shows that over the most recent four-quarter period from 2010 Q3 to 2011 Q3, the U.S. manufacturing sector grew at 4.37%, or three times the 1.46% growth rate of the overall economy (real GDP), demonstrating that American manufacturing is at the forefront of the economic recovery.
HT: Robert Kuehl