Wednesday, August 24, 2011

American Manufacturing Drives the Recovery

Both a) new orders and b) actual shipments of manufactured durable goods showed strong monthly increases in July, increasing by 4.0% and 2.5% respectively compared to June, according to today's Census Bureau report. New orders for durable goods in July, at $201.5 billion, were at the highest monthly level since September 2008, almost three years ago (see blue line in chart above).  Actual shipments of manufactured durable goods (electrical equipment, computers, appliances, cars, aircraft, machinery, fabricated metal products, transportation equipment, etc.) also exceeded $200 billion in July, for the first time since October 2008. (see red line in chart).   

Bottom Line: Today's report on the strong increases in both new orders and actual shipments of durable goods strengthens the case that American manufacturing continues to be one of the strongest sectors and main drivers of the economic recovery.  Employment gains in manufacturing this year further confirm the case that manufacturing is at the forefront of the expansion.  In 2011, 180,000 new manufacturing jobs have been added in the first seven months, which is the largest January-July increase in manufacturing jobs since 1994.  American manufacturing alone was responsible for close to 20% of the 930,000 new payroll jobs added to the U.S. economy this year through July, even though manufacturing jobs represent fewer than 9% of the total payroll jobs in the economy.


At 8/24/2011 9:42 AM, Blogger morganovich said...

this was all transportation, and heavily influenced by some Boeing orders. (commercial aircraft up 43%) and autos were up 11.5%, mostly due to an easing in parts bottlenecks from japan.

ex transport it was up 0.7%.

"core" capital goods were -1.5%.


this chart implies than durable goods are right where they were 11 years ago.

peak, when i talk about no growth in the 2000's, this is what i mean.

if real GDP is so much higher, why are durables flat?

if real GDP is really up 14-15%, then it seems quite dissonant that durables would be flat.

even if it were, 15% growth in a decade is pretty punk.

the 90's grew 73%.

the 80's grew 107%

we never really recovered from the .com bust.

greenspan's loose money just got us new bubbles, not growth.

the legacy of his ultra accomadative policy has been stagnation.

the fed is like some quack doctor from 1800 claiming that if we just bled the patient more, he'd recover. this is consummate bigger hammer theory and they seem unable to conceive that it isn't working.

look for more of the same from jackson hole, even with some of the regional fed chairs in open rebellion.

i think you'd have to be nuts to hold your cash savings in dollars.

At 8/24/2011 9:47 AM, Blogger Buddy R Pacifico said...

This reafirms my conviction that a comprehensive market economy is a vibrant economy. Making things supports a lot of the service sector.

At 8/24/2011 10:51 AM, Blogger Benjamin Cole said...

Love an exchange rate that helps USA exports and domestic industries.

Bernanke-san: Please print more money.

Inflation would help us deleverage; higher real estate prices would boot small business owners and help banks; resultant growth would help us get jobs; a cheaper dollar would help domestic industries.

Please Bernanke-san, print money, print a lot more money, print Ben Franklins until the plates melt, then start issuing scrip.

Some people have an ascetic fetish for money, and believe we all should suffer to maintain the purchasing power of the dollar. We should suffer for decades and decades, like the Japanese. If the economy shrinks, that is okay if the value of the dollar is preserved. As in monetary formaldehyde.

Not me. I say, "Bernanke-san, buy several oil tankers worth of ink and start printing."

At 8/24/2011 10:57 AM, Blogger rjs said...

the regional indexes, ie, philly Fed, empire state, richmond Fed, were all down for august...

At 8/24/2011 11:53 AM, Blogger Stone Glasgow said...

The only reason they are making more stuff is because the stimulus created more demand. Like, duh, obviously.

At 8/24/2011 12:21 PM, Blogger juandos said...

Steve says: "The only reason they are making more stuff is because the stimulus created more demand"...

On what planet?

Obama’s Economists: ‘Stimulus’ Has Cost $278,000 per Job

'The stimulus is now causing the economy to shed jobs.'

At 8/24/2011 12:58 PM, Blogger Stone Glasgow said...

Juan, who is "Steve?"

At 8/24/2011 1:14 PM, Blogger morganovich said...


greenspan spent all of the 2000's printing money to "clean up a bubble".

all we got was a new, worse bubble and a decade of growth 75% below trend.

yup, that printing money sure works a treat.

as i know already that you are impervious to facts, i'm sure this will not shake your rock solid faith in the economic equivalent of a magic elixir sold out of a wagon, but that does not change the facts any.

At 8/24/2011 1:22 PM, Blogger juandos said...

"Juan, who is "Steve?""....

My apologies Stone, I was actually talking to a 'Steve' on the phone when I was in the middle of a reply to your comment...

Again, my apologies...

At 8/24/2011 1:32 PM, Blogger Benjamin Cole said...


Try reading Scott Sumner, Nunes, or Hawtryblog. David Beckworth is good too.

Your paleo-monatarism would embarrass a Neanderthal.

In the 1990s, Friedman advocated Japan inflate. They never did, and they have been eclipsed by China and S Korea.

We are next.

China now buys more PCs than the USA.

At 8/24/2011 1:35 PM, Blogger Benjamin Cole said...

You know, I wonder if a few bad episodes–Wiemar Republic, Zimbabwe, Argentina, perhaps the USA of the 1970s–has not made most central bankers and policy wonks far too fearful of inflation.

After all, how many nations prosper through moderate and varying inflation, ala China, S. Korea, and the USA of the 1980s and 1990s?

And then we have Japan, no inflation and little prosperity.

According to the Hong Kong Monetary Authority, the “revealed preference” for mainland China’s central bankers is toward growth, rather than inflation fighting. We may assume Japan has taken the opposite tack.

What often annoys me is that there is some unspoken premise that static prices are a great moral virtue (set aside that even measuring prices is controversial, see the CPI).

Asceticism is a common human trait. Religious groups sometime practice self-flagellation. Suffering for a higher moral cause is captivating at times.

And the money fetishists have agreed that monetary asceticism is divine–that we should suffer to protect the purchasing power of the dollar, even for decades, even forever.

Baloney. Really, varying inflation in the three to six percent range probably is excellent for economic growth. Certainly the US track record of 1980-2000 suggests that.

I suggest that fighting inflation makes less sense in an open economy such as the USA, where labor, capital, services and goods easily cross borders. If something rises in price in the USA, it is imported more. Printing more money probably leads to long-term growth, and then maybe some inflation, although ever there is global competition holding down prices. And productivity.

The US private labor force has just about de-unionized.

Please Bernanke, print a lot more money.


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