PrintI wanted to mention a couple of stories today that actually brought some good news. The first two are on a point that I have made a couple of times—most clearly in the Economics and Politics webinar I linked to back in July—about how the U.S. is in a relatively strong competitive position, despite the glaring weakness of capital dependency.
The stories, “Cost advantages build case for US industrial revival” on page 5 of the Financial Times (FT) and “A Manufacturing About-Face: Made in America and Sold in China” on page A18 of the New York Times (NYT), both talk about how U.S. manufacturing is regaining its competitiveness, although they come at it from different angles. The FT story references a Boston Consulting Group (BCG) report, which predicts that growth in U.S. manufacturing could add five million jobs in the U.S. by 2020. Although the FT story indicates that some analysts are skeptical, the NYT coverage supports the idea of a revival by identifying and describing several companies that are doing exactly what is described in the headline—manufacturing in America and selling abroad.
I broadly agree with the conclusions of the BCG report and expect this trend to continue to grow over time. The major underlying factors—energy costs for manufacturing and transport, worker productivity and relative labor costs, demographics, and relative infrastructure and time to market—are only augmented by issues of security (important for China in the face of recent riots and especially for the Japanese) and the security of intellectual property. There has always been a cost to offshoring, but the benefits have outweighed those costs. Now, as the benefits begin to erode, the costs are becoming more apparent, and we find ourselves nearing a tipping point.
The other piece of good news, which I will note only briefly as I want to deal with the issue in detail in another post, is “Rising Home Values Repair Balance Sheets” from page A2 of the Wall Street Journal. Increasing home prices will have multiple beneficial effects, and the fact that prices are now rising in many markets is a significant positive factor for every aspect of the U.S. economy.
Have a great weekend!
