On Monday, the Institute for Supply Management’s widely watched measurement of manufacturing activity in the United States showed its fourth straight month of contraction.
Even though the gauge rose to 48.2 in January from 48 the previous month, any number below 50 is considered contraction.
Once upon a time, this trend would have almost certainly — unlike the stock market — have signaled an impending recession. That’s less sure now. For one thing, the troubles in factory orders are highly concentrated in segments that serve the troubled oil sector.
Also, and too bad for good American jobs, manufacturing makes up far less of the economy than it once did. In 1970, it accounted for almost a quarter of gross domestic product. Now it’s about 12 percent. Finance has risen from about 14 percent in 1970 to more than 21 percent of GDP.
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Still, factory contraction’s other drivers — the strong dollar and falling world demand — are causes for worry, even in the Northwest. Here we’ve lately seen stagnation in manufacturing jobs. Washington’s 291,000 in December is down slightly from earlier in the year and still below its pre-recession peak. Oregon lost more than 5,000 factory jobs to end the year at 185,700, also below its level in the mid-2000s.
Other causes are at work, including increasing automation. But the much-hyped “reshoring” of manufacturing jobs is not happening. And that’s not good for the economy, or workers’ economic mobility, even if it doesn’t signal recession.
Today’s Econ Haiku:
A cheap state can’t beat
Undersea data centers
Will marine life byte?
