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What is going right in manufacturing?

Author

Listed:
  • Mark Vitner

    (Wells Fargo Securities, LLC)

  • Azhar Iqbal

    (Wells Fargo Securities, LLC)

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.

Suggested Citation

  • Mark Vitner & Azhar Iqbal, 2019. "What is going right in manufacturing?," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 54(2), pages 114-121, April.
    • Handle: RePEc:pal:buseco:v:54:y:2019:i:2:d:10.1057_s11369-019-00130-x
    DOI: 10.1057/s11369-019-00130-x
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    References listed on IDEAS

    as
    1. Robert J. Gordon, 2016. "The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War," Economics Books, Princeton University Press, edition 1, number 10544.
    2. Mark Vitner & Azhar Iqbal, 2013. "Is Productivity Growth Too Strong For Our Own Good?," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 48(1), pages 29-41, February.
    3. James H. Stock, 2019. "The business cycle is alive and well," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 54(1), pages 79-84, January.
    4. Martin Neil Baily & Barry P. Bosworth, 2014. "US Manufacturing: Understanding Its Past and Its Potential Future," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 3-26, Winter.
    5. Justin R. Pierce & Peter K. Schott, 2016. "The Surprisingly Swift Decline of US Manufacturing Employment," American Economic Review, American Economic Association, vol. 106(7), pages 1632-1662, July.
    6. Azhar Iqbal & John Silvia, 2016. "Is Predicting Recessions Enough?," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 51(4), pages 248-259, October.
    7. Broughton, Chad, 2015. "Boom, Bust, Exodus: The Rust Belt, the Maquilas, and a Tale of Two Cities," OUP Catalogue, Oxford University Press, number 9780199765614.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Manufacturing; Employment growth; Resurgence; Structural break;
    All these keywords.

    JEL classification:

    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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