Trump’s Manufacturing Boom

Is America in the midst of a manufacturing revival? The sector, Bloomberg’s Lisa Abramowicz reports, is “booming, expanding at the fastest pace since 2002 and beating expectations,” per new data from July. The White House credits President Trump’s “economic agenda” for “delivering an industrial renaissance across America.” By contrast, manufacturing in Communist China is stalling in the latest sign of economic weakness on the Mainland.It’s not our intention to overlook the caveats in the economic numbers being reported in either country. Nor do one month’s worth of statistics disclose a comprehensive portrayal of the broader trends. It’s certainly tempting, though, to see the surge in American manufacturing as a vindication of Mr. Trump’s policies, especially insofar as they could be fostering domestic production at the expense of imports from China. The manufacturing report, our Larry Kudlow notes in his column Monday, “comes after a badly misunderstood GDP report — where the topline was only 1.5 percent growth, but the guts of the economy, which is consumer spending and business investment, actually grew at 3.9 percent.” Mr. Kudlow adds that “here too, business equipment is up more than 15 percent, all at an annual rate. Unemployment claims are at record lows.”“Nobody’s getting fired,” Mr. Kudlow writes. “The AI doomsters are wrong. Jobs are rising, not falling.” He reports that “The American dollar is strong,” which could be “exerting lower inflation pressures.” A potential “manufacturing AI productivity boom,” per Mr. Kudlow, “is leading to soaring profits, lower economy-wide costs, and guess what? A record breaking Dow. 53,178 at the close.” Asks Mr. Kudlow: “How about those apples?”In China, meanwhile, “factories are showing new signs of weakness,” the Wall Street Journal reports, with manufacturing activity slowing in July and consumer confidence substantially below levels seen prior to 2022. Weak consumer demand, the Journal adds, is weighing on growth, even as the mandarins at Beijing continue to pursue an export-driven strategy to prop up the economy. Tariffs, to a degree, can be seen to confound that tactic.Mr. Trump’s push to revive manufacturing has sparked debate among economists and policymakers. No one denies that manufacturing employment is down from earlier decades. In June there were 12.6 million Americans working in the sector, compared with 17.3 million in 2000 and a peak of 19.5 million in 1979. Even so, as economist Veronique de Rugy reports, the nation’s industrial output is at an all-time high despite the smaller workforce. That output, Ms. de Rugy reports, comes “thanks to stunning productivity gains.” Even so, the loss of manufacturing jobs is not without a cost. For one thing, know-how is largely being offshored. An analyst of China’s economy, Dan Wang, has reported in Foreign Affairs that “skill loss among not just line workers but also machinists, managers, and product designers” is leaving America “in a poor position to dominate emerging technologies.”It would be good news, then, to see domestic manufacturing showing signs of a comeback, particularly when there is plenty of progress to be made. To the extent that the growth in factories here is coming at China’s expense, more’s the better. To be sure, the hollowing-out of America’s industrial heartland while China’s manufacturing sector surged cannot be reversed overnight, or even in the course of a presidential term. The trend is one to watch.So, too, is the dollar. It is true, as Mr. Kudlow notes, the dollar is strong, though only comparatively with other fiat currencies. Yet the dollar, into which value has been flowing this year, still can’t fetch a 4,000th of an ounce of gold. It’s a staggering plunge for the world’s leading reserve currency, which at the end of the Bretton Woods system was valued at a 35th of an ounce of gold, our favorite marker of where we are.

Trump’s Manufacturing Boom

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