Haver Analytics
Haver Analytics

Introducing

Daniel Golden

Haver Analytics

Publications by Daniel Golden

  • The decline of US manufacturing and the rise of Chinese manufacturing has preoccupied policymakers over the past 25 years. It has resulted in the latest effort to use tariffs to try to drive domestic and foreign manufacturers back to the United States and limit trade disparities with China. This idea of bringing back manufacturing to the US is so ingrained in people’s thinking that it almost seems odd to question if that is a goal the US should pursue.

    The facts are clear: Employment in the US manufacturing sector from 1965 to 2000 was fairly stable in a range between 17 million and 19 million. However, there was an abrupt shift away from manufacturing in the early 2000s, to a new lower range of 11.5 million to 13 million, which was nearly a 6 million decline, or 33 percent (see chart 1).

  • The economy remains resilient and core measures of inflation are stubbornly high in the face of the most aggressive Fed tightening in decades. This resilience is partly a result of government stimulus programs during the COVID-19 pandemic. These programs generated a stockpile of excess savings that has continued to support household spending through rising inflation and higher interest rates. The Fed needs to counter that fiscal expansion in its fight against inflation.

    Despite all the layoffs and furloughs, household income jumped during the pandemic due to the massive fiscal stimulus. Chart 1 shows the actual level of disposable personal income through the pandemic compared to trend. The income supports totaled more than $2 trillion in 2020-21. As the chart shows, the rise in income supports matched disposable personal income almost dollar for dollar.