For the struggling American economy, the latest manufacturing news has come as a serious (and little noted in the general media) blow.
The Federal Reserve’s October report on industrial production and capacity utilization reveals that “Industrial production decreased 0.2 percent in September after edging down 0.1 percent in August… In September, manufacturing output moved down 0.1 percent for a second consecutive monthly decrease… Capacity utilization for the industrial sector fell 0.3 percentage point in September to 77.5 percent, a rate that is 2.6 percentage points below its long-run (1972–2014) average.”
The impact on jobs has been obviously detrimental. The Bureau of Labor Statistics reports that the manufacturing sector lost 17,000 jobs in August. The impact of America’s highest-in-the-developed world corporate taxes, and the ever-increasing environmental regulations can’t be overstated.
A manufacturing industry trade association asked “Will the Obama Administration hold China accountable for cheating, or instead offer even more concessions …Will the Federal Reserve raise rates, which could make our exports less competitive? Will China and other Asian economies continue their path of devaluing currencies? …Manufacturing is more exposed to the global economy than other sectors, so those policy interventions are critically important.”
As the New York Analysis of Policy and Government previously reported, “The crisis has its antecedents long before President Obama took office, during the tenure of President Clinton.
“In October 0f 2000, Clinton signed legislation granting permanent normal trade relations to China. The measure had been bitterly opposed by conservatives, human rights groups, and unions. The move was consistent with his controversial policy of enhancing relations with Beijing, which included selling China supercomputers and nuclear technology. The moves are now seen as playing a significant role in building China’s sophisticated and aggressive military.
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Alan Uke, in his study “Buying America Back,” points out:
“The equation is simple: steady employment instigates and enables spending; spending bolsters the economy—but only if a proportion of that money stays in our country…in recent years, a staggering increase in the quantity of products we import to the United States has suffocated our domestic manufacturing industry. As an example, in 1960, 8% of the manufactured consumer products Americans purchased were imported. Today, that number has drown to an astonishing 60%! Yet, forty years ago, when imports were less prevalent here and our country was a world leader in manufacturing, we had the world’s highest standard of living. We no longer do. In just four short decades since then our buying power has stagnated and the working middle class is barely treading water.”
The Alliance for American Manufacturing summarizes the crisis in this way:
“Long before the collapse of the U.S. investment banking system in 2008, once-dominant and important U.S. industries like semiconductors, machine tools, printed circuit boards, consumer electronics, auto parts, appliances, furniture, clothing, telecommunications equipment, home furnishings, and many others suffered their own economic collapse, sputtering anemically in a global economic system that continues to be stacked against U.S.-based producers…
“With the U.S. government plunging deeper into debt by trillions of dollars, it now becomes imperative for the United States to ensure that the industrial sector regains its strength and that the nation becomes an exporting juggernaut. In order to avert a slide into economic depression, the United States will have to stop going deeper into debt to pay off its bad debts. The country must restart its industrial engine and produce products that Americans need to buy and the world demands. If this does not happen, a federal government bankruptcy could dwarf the financial industry collapse of 2008…The mindset among America’s economic elite—that the country does not need an industrial base—has put the country and the world economy in a ditch.”