American-made goods are hot commodities these days. According to the U.S. Commerce Dept. (Washington, DC), demand for exports recently experienced its biggest monthly gain in 5 years. But, some other news is a bit more sobering.
I recently returned from a family vacation out West. To reduce our “carbon footprint,” we decided to take Amtrak. It had been quite a few years since the last time that I rode a long-distance train in this country. The trip went smoothly, but I was rather startled by all the heavy freight traffic zipping by at high speeds during the overnight trip.
Most of the freight cars contained double-stacked containers on their way to Chicago from Long Beach and other West Coast ports. However, there also was quite a bit of westbound traffic. Many of the containers may have been empty, but after reading today’s headlines, that may not necessarily have been the case.
American-made goods are hot commodities these days. According to the U.S. Commerce Dept. (Washington, DC), demand for exports rose 4 percent in June, despite record domestic prices for oil. In fact, it was the biggest monthly gain in 5 years.
“June manufactured goods exports were a phenomenal 17.4 percent higher than a year ago,” says Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers (NAM, Washington, DC). “This is an acceleration from the already rapid 15 percent average growth pace of the earlier months of this year.
“Manufactured goods exports are growing more than twice as fast as imports of manufactured goods, and as a result, the manufactured goods trade deficit is falling,” adds Vargo “June’s manufactured goods trade deficit was 9 percent lower than it was a year ago.”
Industrial machinery and primary metal products are two of today’s export stand-outs. “The performance of manufactured goods trade is so strong that it is a major offset to the rising deficit in petroleum,” Vargo points out.
That certainly is good news, but here’s something a little more sobering. At the same time that the folks in Washington were cheering about the robust U.S. economy, Global Insight Inc. (Waltham, MA) was announcing that China will overtake the United States as the world’s leading manufacturer earlier than previously anticipated.
Measured in real value-added terms, China’s share in global manufacturing is predicted to become No. 1 by 2016. “This is helped by the Asian giant’s rapid gains in the market shares of textiles, basic metals, computer equipment, appliances and mineral products,” says Prem Premakumar, a senior economist at Global Insight.
But, that’s not necessarily a reason to panic. “The United States will continue to lead in selected high-valued manufacturing industries, such as aerospace, pharmaceuticals and specialized equipment,” claims Premakumar. “Also, the manufacturing sector accounts for only 12.5 percent of U.S. gross domestic product, while the service sector is substantially more dominant. In contrast, 36 percent of the Chinese economy is engaged in manufacturing.”