Reports of surging inflation and a looming recession are highlighted daily in the media across the U.S. However, some sectors of our economy have strengthened during this time of economic uncertainty. The article, "U.S. factories emerge as a strong point in a weakening economy", details how it has been a strong year for U.S. manufacturing, despite higher interest rates. According to the Federal Reserve, this September saw factories add 467,000 jobs and experience the highest production rate in 14 years. Auto manufacturing, which has had it ups and downs over the recent months, also managed to increase production by 1% in September. These increases in production in addition to jobs are an impressive feat given these industries have dealt semiconductor shortages since the beginning of the pandemic. Despite recent success, manufacturing is well off its 1979 high in terms of employment. Less than 9% of U.S. jobs today are manufacturing jobs, compared to 22% in '79. The combination of increased efficiency, manufacturing jobs moving overseas, and the need for more tech savvy laborers have been cited as reasons why manufacturing employment has fallen over the past 40 years.
Although many are pleased with the performance of the manufacturing industry, as look toward the future there are two main causes for concern. Increased mortgage rates have lowered home sales, leading to lower demand for manufactured goods that go along with the purchase of new home. And the appreciation of the U.S. dollar, which is likely to have a negative effect on manufacturing exports. As we learned in class, the appreciation of a country's currency makes its exports more expensive. This is a real life application of what happens when the dollar strengthens.
https:/www.mpr.org/2022/10/20/1130021630/factories-factory-industrial-production-employment-jobs-economy
It's good to hear that although we are in a recession and a weaker economy that the U.S. factories are able to have a strong year, especially with high interest rates. I remember during the chip shortage there was a pause in a lot of auto manufacturing, cars would be produced without certain parts and dealers couldn't re-stock. Because of this it's also good to hear that the auto manufacturing managed to increase production even if it's by 1%.
ReplyDeleteI agree! After reading some of these other articles it's hard to realize that there are still some good things happening in the economy!
DeleteWith everything that is happening with the economy and how this country is moving it is shocking to see that there are factory jobs opening in large amounts around the U.S. An increase in factory jobs in the country is always helpful because it allows the U.S. to not rely on other countries for goods.
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