Understanding US manufacturing is the key to an understanding of the whole US economy. Even now, after the monetization of the economy that has taken place over the last three decades, US manufacturing is still world-class, and it encompasses a disproportionate share of the long-term well-paid jobs that the American people expect from their economy. Every president since FDR has been keenly aware of this, and it's no surprise that conventional wisdom holds that a president will be judged largely by the economic developments in his term of office. The White House has therefore been paying close attention to US manufacturing output numbers.
It almost goes without saying that every first-term president wants a second term and that every second-term president wants to create a legacy. The present administration opened for business early in 2009, amid a generalized economic meltdown driven by the collapse of a delicate web of paper promises in the financial sector. The shockwaves from this disaster spread to the US manufacturing industry, leading to an economic slowdown, reduced hiring, and historically low capitalization.
Given the desperation of 2008, any incoming administration would have been forced to act on the crisis—even if only to put a four-year bandage on the wound. That was what more than a few of this administration's adversaries claimed was happening with stimulus programs such as cash for clunkers, homeowner assistance, and temporarily restricted payroll deductions for workers.
Growth has continued, however, giving the lie to the contention that the stimulus programs were just a put-up job that was destined to fail. While it would be wrong to claim that the recovery has proceeded by leaps and bounds, there has been a real recovery in the US manufacturing sector. Much of this recovery is directly traceable to a rise in overseas orders, rather than to federal stimulus. That's a sign of real growth, and the administration—now well into its second term—is counting on these numbers to increase further.
The reason the White House needs US manufacturing output to continue its recovery has almost nothing to do with US manufacturing. It's common knowledge that the president faces fierce and determined opposition on almost every front. From foreign policy to trade issues, from tax rates to the definition of marriage, every move the White House makes meets a challenge from Republicans, especially in the House of Representatives. Promising numbers for US manufacturing growth strengthen the president's hand and help him promote his agenda. Even opposition to his judicial nominees may slacken somewhat if that opposition must face a popular president who has gained a reputation for bringing back US manufacturing jobs.
The idea of the US president directly controlling even the federal budget, let alone the whole economy, is almost magical thinking on the part of pundits and the public. As inaccurate as it is, however, this impression persists, and the observable power of a president to get things done will hinge on perceived successes in US manufacturing for the foreseeable future.
(Photo courtesy of freedigitalphotos.net)
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