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Is American manufacturing in decline?

Author

Listed:
  • Kevin L. Kliesen

    (Federal Reserve Bank of St. Louis)

  • John A. Tatom

    (The Johns Hopkins University)

Abstract

There is a widespread view that American manufacturing is in decline. This view reflects many factors. First, real GDP growth during the current business expansion has been the weakest in the post-World War II period. Second, over the decade from 2000 to 2010 manufacturing employment declined by about 6 million. Third, persistent manufacturing trade deficits have led many observers to conclude that U.S. competitiveness has eroded. This paper discusses these arguments and suggests that, instead, U.S. manufacturing is a leading growth sector and has remained strongly competitive internationally. We show that traditional domestic economic forces adequately explain recent trends in U.S. manufacturing output and employment growth. The recent reduction in the corporate income tax rate may further boost the fortunes of the U.S. manufacturing sector, although this favorable development could be offset by a more restrictive international trade regime.

Suggested Citation

  • Kevin L. Kliesen & John A. Tatom, 2018. "Is American manufacturing in decline?," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 53(3), pages 107-123, July.
    • Handle: RePEc:pal:buseco:v:53:y:2018:i:3:d:10.1057_s11369-018-0072-6
    DOI: 10.1057/s11369-018-0072-6
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    1. Huang, Guan-Ying & Huang, Henry Hongren & Lee, Chun I, 2020. "Taming the dark side of asset liquidity: The role of short-term debt," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 539-562.
    2. Kevin L. Kliesen & John A. Tatom, 2018. "Here’s Why U.S. Manufacturing Is Fundamentally Strong," Economic Synopses, Federal Reserve Bank of St. Louis, issue 4, pages 1-4.

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