Eight areas of the US economy are now performing at or close to the poorest in modern history. Most of these are also at or close to the lowest levels in the developed world today.
The deterioration in these outcomes occurred before the coronavirus arrived. Yes, the pandemic has worsened most statistics since February. That is true. But these variables had collapsed well before any hint of a threat from the virus had been heard.
Tragically for most Americans, there is no indication that things will improve any time soon. This article is published just as the global data has revealed that the USA now leads the world – if that is the right expression – on coronavirus active cases, at a worrisome 54,248. The USA has just surpassed Italy, with numbers still climbing alarmingly.
Each of these eight disastrously-performed components of the economy impacts the quality of life of American citizens, so each deserves a dedicated Daily Kos post – and a chart to demonstrate visually just how damaging recent mismanagement of the US economy has been.
US factory output
The graph, above, shows the trajectory of factory activity over the Trump presidency. The monthly data comes from IHS Markit and measures the health of the American manufacturing sector. It has just fallen to the lowest level since they started recording this series eight years ago.
The manufacturing PMI (purchasing managers’ index) was a healthy 55 index points when Trump was inaugurated, reflecting solid demand for US manufactured products, both locally and for export. After a shaky few months in early 2017, this steadily rose to 56.5 index points in April 2018, the highest since mid-2014.
Then disaster struck. Trump imposed tariffs on steel and aluminum in May 2018 and plunged the country into a disastrous trade war from which there is no sign whatsoever of recovery. Factory activity immediately declined, hitting new lows in May last year, then in July and again in August. It recovered slightly over the next four months, but has now resumed its downwards trajectory.
The manufacturing PMI collapsed to 49.2 in March, thus recording the fastest deterioration in operating conditions since the depths of the financial crisis of 2008.
Impact on the jobless
As shown in the last article in this series, workers employed in durable goods manufacturing declined by 6,000 between January this year and January last year. Over the same period textile mills lost 4,900 workers, clothing manufacturers lost 8,000 and the printing industry lost 9,500 employees.
According to IHS Markit, manufacturing firms “shed workers at a solid rate in March and input prices increased the least for almost three years. Finally, business confidence was at a record low level due to coronavirus uncertainty.”
This suggests the jobless numbers for March could make grim reading. We must wait and see.
But wait, there’s more ...
The other seven areas of gross economic mismanagement, besides manufacturing, are:
- The severe decline in total exports
- The deepening US trade deficit
- The blow-out in federal government spending
- The collapse in federal government revenue
- The record budget deficits
- The ballooning federal debt
- Interest payable on the debt
We shall examine these in coming days. In all of them, the world’s worst status and/or worst in US modern history was achieved before the onset of the coronavirus. The data confirms this. This is important to understand if we want the situation to be remedied.