Thursday, April 26, 2012

If Separate, America's Manufacturing Sector Would Rank as the Tenth Largest Economy in the World


 Rank  Country GDP in 2011
Millions ($)
1United States $15,094,025
2China $7,298,147
3Japan $5,869,471
4Germany $3,577,031
5France $2,776,324
6Brazil $2,492,908
7United Kingdom $2,417,570
8Italy $2,198,730
9Russia $1,850,401
10U.S. Manufacturing$1,837,031
11Canada $1,736,869

The BEA released data today on "GDP by industry" for 2011, and reported that U.S. manufacturing output last year reached $1.837 trillion, which was a new record for current-dollar manufacturing output.  In constant dollars, last year's manufacturing output was just slightly below the record $1.856 trillion manufacturing value-added in 2007. 

If American manufacturing were counted as a separate economy, it would rank as the tenth largest national economy in the world, see chart above (IMF data here for GDP in 2011), with output just slightly below the entire economy of Russia and ahead of Canada's total GDP.  

Bottom Line:  American manufacturing is alive and well and poised for even greater growth in the future.  Flush with record-level profits, the manufacturing sector has never been financially healthier that it is today and the future of American manufacturing has never looked brighter. After years of negative reports about the decline of American manufacturing, it’s now time to recognize and celebrate a great turning point, as America’s industrial sector moves in a new direction that many are now calling a “manufacturing renaissance.”

11 Comments:

At 4/26/2012 5:47 PM, Blogger PeakTrader said...

China's GDP is questionable and it certainly overstates its living standards.

Economist Gary Shilling stated:

The Chinese economy remains export-led with consumer spending accounting for a mere 34 percent of GDP, compared with 59 percent in Japan, 58 percent in Germany and 71 percent in the U.S..

 
At 4/26/2012 6:02 PM, Blogger PeakTrader said...

The mix of GDP is different for each country.

Y = C + I + G + NX

GDP = Consumption + Investment + Government + Net Exports.

For example, if you take away China's investments and net exports, you have consumption and government, and we know consumption is low and malinvestment is high.

 
At 4/26/2012 6:06 PM, Blogger Benjamin said...

Wow! Check this out, from a manufacturer---everyone believes in free enterprise unless they do not:

U.S. Gas Export Limit of 10% Would Be ‘Smart,’ Dow CEO Says

By Jack Kaskey - Apr 26, 2012 11:29 AM PT

Dow Chemical Co. (DOW) Chief Executive Officer Andrew Liveris said it would be “smart” for the U.S. to limit natural-gas exports to 10 percent of output because expansion plans in his industry are rooted in low gas prices.
Exporting more than 15 percent of the country’s gas production would tighten markets too much and lead to higher prices, Liveris said today in a telephone interview. Excessive exports of liquefied natural gas, or LNG, could “kill” chemical investments like the company’s $4 billion expansion in Texas and Louisiana, he said last week.

--30--

Yes, yes, we believe in free trade, we believe in free enterprise, we want cheap immigrant labor---but, by the way, how about limiting natural gas exports?

Or subsidizing corn farmers though a pink- socialist ethanol program?

Creating whole industries dependent on defense-homeland security-VA spending?

When I worked in the S&L industry many moons back, we said there were two things we believed in--free enterprise and Regulation Q.

 
At 4/26/2012 6:11 PM, Blogger Che is dead said...

"When I worked in the S&L industry many moons back ..." -- "Benji"

That statement explains a lot of things.

 
At 4/26/2012 6:13 PM, Blogger rjs said...

what would the 5 largest banks rank, if separate...

 
At 4/26/2012 6:25 PM, Blogger Larry G said...

of course this chart cries out for another than would show what percentage of each economy was manufacturing....

and throw in a second one for service sector...

 
At 4/26/2012 7:19 PM, Blogger Craig Howard said...

of course this chart cries out for another than would show what percentage of each economy was manufacturing....

Why?

As a country's wealth increases, it's only logical that service industries will grow. People have more money to spend on them.

To claim that a falling percentage of economic activity from manufacturing is an indicator of economic decline (especially when manufacturing output is growing) is a lie.

 
At 4/26/2012 7:30 PM, Blogger Larry G said...

I was curious about how the countries compared on that point...

mostly for FYI...not any particular angle about service sector vs manufacturing except in terms of country comparison and trends.

Clearly Prof. Perry thinks manufacturing is worthy of highlighting....

 
At 4/27/2012 12:00 PM, Blogger VangelV said...

American manufacturing is alive and well and poised for even greater growth in the future.

You will excuse me for being a skeptic but who in their right mind would believe the reported data? Most of Apple's production takes place abroad but I am willing to take a guess that Apple's revenues are included in the data of a number of nations. I prefer to let the market tell me how various nations are doing and right now I do not see many positive votes for many of them.

 
At 4/27/2012 2:09 PM, Blogger Mark J. Perry said...

Sure, you can always find a dark cloud in every silver lining if you look hard enough.

 
At 4/27/2012 3:24 PM, Blogger VangelV said...

Sure, you can always find a dark cloud in every silver lining if you look hard enough.

But I have my doubts that you can find a dark cloud even in the middle of the biggest of storms. That is the problem. You cherry pick data to support your positive views even when most of the data is overwhelmingly negative.

 

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