American Consequences - June 2018

breakdown shows the biggest full-year GDP growth in states like Colorado, Nevada, and Arizona. No one will believe you when you tell them the growth rate of West Virginia more than doubles that of New York, but those are the facts.

CHANGE IN TOTAL NONFARM EMPLOYMENT

Total nonfarm Government Other services Leisure and hospitality Education and health services Professional and business services Financial activities(3)

Information

Utilities Retail trade Wholesale trade Manufacturing Construction Mining and logging

Year over year growth -2%

2%

4%

8%

6%

0%

We’ve long been waiting for a resurgence of the American heartland. Now it’s happening.

running the drills. Homes are being built, and manufacturing is picking up. The types of jobs that can help rural parts of America are showing the biggest gains. Wages in China and emerging markets have risen enough to make manufacturing more competitive. Now, it’s not as cheap as it once was to move your manufacturing outside the U.S. America is making real things again. The Institute for Supply Management’s U.S. Manufacturing Purchasing Managers Index (PMI) surveys managers in the manufacturing sector to see how optimistic their plans are for the near future. A level above 50 means that manufacturing is expanding. Right now, the index is flirting with 60, a level that shows real growth... one we haven’t seen in roughly 15 years (see top chart on next page). And shipments of U.S. manufactured goods have followed... Since 2016, they’ve surged 12.3% and have set new all-time highs (see bottom chart on next page).

America is making real things again.

THE MAKINGS OF A RECOVERY The official unemployment in the U.S. has hovered below 5% for two years now, but job growth has been concentrated among skilled professionals in big cities. Only recently have we seen jobs in blue-collar sectors – like manufacturing and construction – pick up (see above chart). Typically, industries don’t all boom at once. In 2010 through 2014, the oil and gas industry was hiring thanks to technological advances of the U.S. shale boom, but the rest of the economy was in shambles. By the time the recession faded, oil prices crashed in 2014 and 2015 and the industry started cutting back on employees. Now everything is working at once. Oil has settled at enough to keep oil producers

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