The Economic Perspective: “Is Manufacturing Still a Leading Indicator?”

This is Mary Walden with economist MW, welcoming you to the economic perspective.  Today’s program asks if manufacturing is still a leading indicator.  Mike, all eyes are focused on the economy and looking for signs of a potential recession.  One troubling indicator is manufacturing.  Production from our nation’s factories has been dropping for several months.  In the past such a trend was a good forecast of an impending recession.  Is this still the case?

  • No – because manufacturing has been dropping as a % of the economy
  • Nationally, down to 11%, a full percentage point under a decade ago, and half of a generation ago
  • Not because factories are making less – output is as high as ever
  • Because the rest of the economy has grown faster, particularly services
  • So economists are putting more emphasis on activity in the non-manufacturing part of the economy
  • And while manufacturing output has been falling, non-manufacturing activity is still rising, albeit more slowly
  • So one reason why many still don’t yet see a recession in the near future
  • I’m MW

And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.