The Case That A Manufacturing Renaissance Is Really Happening

Yesterday I presented some charts casting doubt on the existence of a manufacturing renaissance in the United States, but it turns out that at this very same time National Economic Council chief Gene Sperling was delivering a talk at Brookings that included the chart above making the case for a real non-cyclical recovery in manufacturing employment.

This is based on a quantitative analysis by the Council of Economic Advisrrs but the qualitative point is that the previous trend had gone like this: Manufacturing employment stays flat and output rises thanks to productivity growth, then during recessions employment falls. At the end of the recession, it flattens out again. That flattening is the “range of normal cyclical rebound” while the slight uptick represents structural factors, including the waning of the Chinese labor cost advantage and the emergence of a U.S. energy cost advantage.