Economy Trade

Manufacturing Falls Further Into Trump’s Recession

JM Ashby
Written by JM Ashby

Economists predicted that American manufacturing would post a small recovery during the month of November for reasons that I would personally call dubious, but they were wrong.

American manufacturing has not recovered at all and has actually fallen further down into a recessionary hole Trump made for them according to the latest reading the purchasing manager's index.

From Reuters:

The Institute for Supply Management (ISM) said its index of national factory activity dropped 0.2 point to a reading of 48.1 last month. A reading below 50 indicates contraction in the manufacturing sector, which accounts for 11% of the U.S. economy.

The ISM index needs to break below the 42.9 level to signal a recession in the broader economy. Economists polled by Reuters had forecast the index rising to 49.2 in November from 48.3 in the prior month.

Though the ISM said business sentiment had improved, likely as the United States and China inch towards a partial trade deal, November’s reading marked the fourth straight month that the index remained below the 50 threshold.

This positive sentiment and the corresponding splurge in stocks are the reasons why economists predicted manufacturing would post a small recovery; reasons I find dubious.

The sentiment has been fueled by happy talk from the likes of Trump's top economic adviser Larry Kudlow. It's been fueled by Trump claiming he had secured his "greatest and biggest deal ever." It's been fueled by China claiming they had reached an agreement to roll back tariffs.

In other words, it's been based on a whole lot of nothing. It's now December and there is no deal.

There's just no tangible reason to think manufacturing is going to recover anytime soon especially if factory activity dropped just prior to the holiday shopping season. That suggests that demand has not recovered at a time when demand should be at its peak. Happy talk from the White House may shine dollar signs in the eyes of investors, but it means effectively nothing for average Americans and, evidently, supply chain managers.

Trump could obviously make things much worse if he moves ahead with another round of tariffs on Chinese goods on December 15th.

  • waspuppet

    And in a couple of weeks Trump will belch about how “a deal is near” and everyone on Wall Street will get all excited and have a rally and Trump will say LOOK AT MY BEAUTIFUL STOCK MARKET YOU CAN’T IMPEACH ME

  • Draxiar

    Why anyone would believe anything the trump administration has to say about economics is almost beyond me. Sure investors want to be in on the prize if what he says comes to pass. Only, his history is horseshit. His word isn’t worth the Big Mac breath it’s carried on.

  • muselet

    Tomorrow morning, I expect a tweetstorm from the Lincoln Bathroom decrying the ISM as a bunch of Democrat-loving socialists.

    Bets?

    –alopecia