Oh who knows. The statisticians at the BEA and BLS are just getting their land-legs back and now we might be looking at another attempted shutdown of the government by the end of the month so who really knows? It might be profitable to buy a dirty hedge on one of the prediction markets: "Eliminate the Filibuster".
From the University of Chicago, Booth School of Business, Chicago Booth Review, January 5:
Consumer prices indicate that manufacturing output has been far more impressive than generally believed.
he United States has become better known for inventing things than making them. That goes for everything from Apple’s iPhones to Levi’s jeans. Low-cost foreign labor is an obvious reason factories have migrated abroad, but economists have been fretting that for more than a decade, US manufacturing productivity—the efficiency of production, or how much input is needed to produce a given amount of output—has been in decline.
However, the measures traditionally used to gauge manufacturing productivity have dramatically understated its performance, suggests research by the Federal Reserve Bank of Philadelphia’s Enghin Atalay and Nicole Kimmel, University of Chicago’s Ali Hortaçsu, and Chicago Booth’s Chad Syverson. The researchers base their findings on the premise that in rapidly changing industries, the traditional yardsticks—producer and import price indexes—fail to fully capture quality improvements and therefore understate productivity growth. Instead, consumer prices, which more thoroughly adjust for quality changes but aren’t normally used to gauge manufacturing productivity, may be a better measure.
The size of the manufacturing sector means that its productivity performance carries major implications. Concerns over the apparent stagnation of the sector’s productivity are heightened by the fact that manufacturing is generally regarded as a hub of innovation. In contrast to its 10 percent share of aggregate employment, it accounts for more than two-thirds of research-and-development spending and corporate patents.
For decades, productivity in US manufacturing advanced far faster than productivity in the economy as a whole. Between 2009 and 2023, however, there was a slight decline in the sector’s total factor productivity, which is a broad, Bureau of Labor Statistics’ measure of output per unit of labor and capital input. This dip looks even worse in light of the 0.8 percent TFP growth per year during this time for the overall economy.
The researchers find that most of the stagnation can be explained by productivity changes in one area: computer and electronic product manufacturing. Although many products in this category, including well-known consumer brands such as the iPhone, are made in China, many others—including various semiconductors and medical electronics—are made in the US. In the analysis, that industry alone explains nearly all of the productivity growth since 1987 and deceleration since 2009, according to the study.
