Blog Post

AEIdeas

The Bureau of Economic Analysis released data today on America’s GDP by industry for the first quarter of this year, and those BEA data show that real US manufacturing value added was more than $2 trillion (in inflation-adjusted 2009 dollars) during the first three months of this year, setting a new all-time record high for America’s manufacturing output (see chart above). And yet we continue to hear all the time about how America doesn’t produce anything anymore, how all of our factory output has moved overseas, and how America’s manufacturing sector has been hollowed out and decimated, etc.

For example, here’s what presidential candidate Donald Trump wrote in USAToday in March of 2016:

Throughout history, at the center of any thriving country has been a thriving manufacturing sector. But under decades of failed leadership, the United States has gone from being the globe’s manufacturing powerhouse — the envy of the world — through a rapid deindustrialization that has evaporated entire communities.

US factory jobs have declined by almost 7 million since peak manufacturing employment in 1979 of 19.5 million, but largely because of advances in technology and significant increases in worker productivity. Just since 2006, the amount of manufacturing output per US factory worker has increased by more than 22%, as we are able to produce increasing, record-setting levels of output with the same or fewer number of factory workers.

Bottom Line: In terms of factory output, the US manufacturing sector is thriving and is still a global manufacturing powerhouse that produced more factory output during the first quarter of this year than any quarter in US history. In contrast to Trump’s rhetoric and public opinion, there has been no de-industrialization or hollowing out of American manufacturing, and that thriving sector of the US economy is actually “alive and well,” despite rumors of its demise.

Update: Here’s another way to understand how the US is still a global manufacturing powerhouse. In 2016 (most recent year available), the US produced about the same manufacturing output ($2.18 trillion) as the combined factory output of Germany, S. Korea, India, Italy, France and the UK of $2.19 trillion (data here).