Abstract
This study looks into whether the manufacturing sector has experienced a stronger-than-expected recovery and identifies five potential drivers of the manufacturing sector’s strong performance—tax and regulatory reform, the shale energy boom, technological advances that reduced the labor needed to produce products, increased concerns about protecting intellectual property, and supply chain concerns. Our statistical analysis confirms the manufacturing sector experienced a resurgence in the post-Great Recession era. The Dynamic Factor Model (DFM) approach suggests the realized path of manufacturing employment was stronger than the historical trends. Business cycle analysis indicates the largest average growth rates are reported in the post-Great Recession era compared to other subsamples. Structural breaks are found in all variables. In our view, the policies and events of the past several years were able to stimulate consistent and lasting growth in the manufacturing sector.
Similar content being viewed by others
Notes
The statistical techniques used here are covered in more detail in Silvia et al. (2014).
It’s true that the dates found in the structural tests were all prior to the Trump Administration taking office. However, continuing forward momentum starting in 2017 would have been necessary to confirm the breaks.
References
Baily, Martin, and Barry Bosworth. 2014. US Manufacturing: Understanding Its Past and Its Potential Future. Journal of Economic Perspectives 28 (1): 3–26.
Chad, Broughton. 2015. Boom, Bust, Exodus: The Rust Belt, the Maquilas, and a Tale of Two Cities. Oxford: Oxford University Press.
Gordon, Robert. 2016. The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War. Princeton: Princeton University Press.
Hemphill, Thomas A. 2019. Manufacturing Benefits from Trump’s Deregulation Agenda. American Thinker. February 9.
Iqbal, Azhar, and John Silvia. 2016. Is Predicting Recessions Enough? Business Economics 51 (4): 248–259.
Lund, Susan. 2019. Globalization in Transition: the Future of Trade and Global Supply Chains. McKinsey Global Institute. January.
NAM. 2019. Manufacturers’ Outlook Survey. First Quarter, March 5.
Pierce, Justin, and Peter Schott. 2016. The Surprisingly Swift Decline of US Manufacturing Employment. American Economic Review 106 (7): 1632–1662.
Silvia, John E., Azhar Iqbal, Sam Bullard, Sarah Watt, and Kaylyn Swankoski. 2014. Economic and Business Forecasting: Analyzing and Interpreting Econometric Results, 2014. New York: Wiley.
Stock, James H. 2019. The Business Cycle is Alive and Well. Business Economics 54 (1): 79–84.
Vitner, Mark, and Azhar Iqbal. 2013. Is Productivity Growth Too Strong for our Own Good? Business Economics 48 (1): 29–41.
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
Vitner, M., Iqbal, A. What is going right in manufacturing?. Bus Econ 54, 114–121 (2019). https://doi.org/10.1057/s11369-019-00130-x
Published:
Issue Date:
DOI: https://doi.org/10.1057/s11369-019-00130-x