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American Manufacturing Sector Is Already in a Recession.

3 min read

Did you know that the manufacturing sector of the U.S. economy was already in a recession?  

Manufacturing fell at a 2.2% rate in the second quarter after a 1.9% drop in the first three months of the year.

This is not the dreaded Media trying to rattle Americans.  It’s those Trump disloyalists — according to the orange ape in the White House —  at the Federal Reserve saying it:

Big picture: Federal Reserve Chairman Jerome Powell cited the weak factory sector as one reason many policy makers support cutting interest-rates.

What they are saying? “The sector is in recession. That’s not news, it’s a consequence of China’s cyclical slowdown and the trade war. We expect another tough quarter in Q3, but by Q4 we think a trade deal will have been done and China’s economy will be turning up,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

This was reported before Trump went all “Let’s raise tariffs again on Chinese goods.”  Yes, Trump backed off for now on raising more tariffs on Chinese goods — we do not want to fuck up Christmas shopping season, but anyone think that Trump is going to make a deal with China now?

Seems that the Media was OK with not talking about American manufacturing tanking:

The divergent performances between industrial companies and those providing services have investors nervous that another shoe will drop soon, as evidence by the roughly $150 billion investors have taken out of equity funds this year. But analysts and investors interviewed by MarketWatch said that this trepidation is unwarranted, given the shrinking importance of the manufacturing sector to the U.S. economy in recent years and the growing role of consumer spending, which now accounts for nearly 70% of U.S. economic output.

“Although manufacturing is important, it’s not as important as it used to be,” wrote Joseph F. Kalish, chief global market strategist at Ned Davis Research in a recent note to clients.

The above was written two months ago.  

Why I am writing about this?  Three reasons.  First, I think you cannot dismiss a recession in the manufacturing sector.  American manufacturing may not be as large a contributor to the economy as it was in the past — thank you automation and free trade, but you have to factor this sector of the American economy with the downturn in the farming sector.  Can the American economy keep humming along with both manufacturing and the farming sectors heading south?

Second, I thought the orange ape in the White House was taking several victory laps on “revitalizing” American manufacturing?  In fact, Trump wears this as some badge of honor.  It sends the signal, “I love me some blue collar workers!”  Trump was supposedly bringing back those types of jobs.  And it was the BS that Trump sold to get voters in several Midwest states to support him.

And one more reason that this is important:  Trump is responsible for the recession in manufacturing.  The recession is a direct result of Trump’s trade war with China.  This was preventable, and as Rick Wilson said, “Everything that Trump touches dies.”

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