The Amazing (and Puzzling) Manufacturing Recovery

What if I told you that this graph explained the U.S. recovery?

Screen Shot 2012-06-05 at 6.37.45 PM.png(Y-axis in thousands of jobs)

You'd tell me I'm crazy. Rightly so. This graph is hideous. It shows manufacturing employment in durable goods (planes, trains, cars, machines, computers) falling by three million between 2004 and 2008 and recovering by a few hundred thousand. Does that look like a recovery to you? Heck no.

But durable goods manufacturing accounted for a third of U.S. growth in 2011. It grew more than twice as fast as any large industry. In some regions, it dominated overall output. In Oregon, the second-fastest growing state last year, durable good manufacturing accounted for an astonishing 80% of growth, as Binyamin Applebaum reported. In the Great Lakes region, it accounted for half. In Washington, D.C., it accounted for zero percent. In Alaska, the fourth-fastest growing state, durable goods actually declined.

Screen Shot 2012-06-05 at 1.00.42 PM.png

This presents a conundrum. In the first graph, manufacturing has accounted for 12% of private sector job gains since 2010. In the second graph, manufacturing accounts for fully 33% of the economic recovery. Why the 3X gap?

Part of the answer is that high-tech manufacturing produces expensive and exportable final products. Fully 30% of economic growth recently has been from car sales alone -- just one category of durable goods. Another part of the answer is that 12% becomes 33% by the magic of productivity. Some of these output gains are coming from workers using the latest super-productive technology. Some of it might come from manufacturing firms squeezing production out of global supply chains or overseas labor. The equation is the same either way: Fewer workers can make more valuable stuff.
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In