Despite what it seems, news is not all bad on the economic front

Source: Forbes

Forbes' Jon Bruner is a legitimate triple-threat in the world of digital journalism these days: he knows economics, can write graphics programming, and has a reporter's eye for counter-intuitive news analysis. Here Bruner's contrarian instincts play out in a look at traction United States manufacturing is showing, even amid the stresses and strains of a global debt crisis, slowing world economies, and domestic strains. In three simple charts, Bruner maps out one of America's current challenges: "output increases and American manufacturing remains competitive with low-cost manufacturing in the developing world. But the enormous job growth that we’ll need in order to avert a second recession won’t come from factories." What about housing?

U.S. Manufacturing Surges Ahead--But Don't Look for a Factory Job

The manufacturing sector has been one of the brighter parts of the U.S. economy since the end of the Great Recession. In 2010, American manufacturers added value of $1.7 trillion to the U.S. economy, up 6.6% over the previous year after accounting for inflation. By the same measure, the rest of the economy grew by 2.2%.

You might not know it from public commentary, but the United States manufactures more than any other country (including China), and U.S. factories are within reach of their all-time greatest output–a record they set in 2000 and came close to reaching again in 2007.

With that growth have come some jobs–about 120,000 new factory jobs in 2011 by the estimate of the Bureau of Labor Statistics, the first year-over-year increase in manufacturing employment since 1998. But that increase, while welcome for those workers who now have a job, barely changes the larger trend: 11.8 million Americans work in manufacturing today, down 40% from peak manufacturing employment in June 1979. In percentage terms, manufacturing employment peaked even earlier: in 1953, 32% of American workers labored in manufacturing, a figure that has fallen to 9% today (38% of workers were in factories in 1943, but World War II made for special circumstances as far as this statistic goes).

Over the last three decades, American factories have become vastly more productive in terms of output per hour of labor. U.S. manufacturers now produce three and a half times more output per worker hour than they did in the peak employment year of 1979, in part because offshoring has sent many low-value jobs overseas, but also because automation has replaced lots of factory jobs. These gains in productivity have been most pronounced during recessions, when manufacturers tend to lay off workers and then replace them with machines as the economy grows again and demand increases.

That’s good for the economy–output increases and American manufacturing remains competitive with low-cost manufacturing in the developing world. But the enormous job growth that we’ll need in order to avert a second recession won’t come from factories

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