Manufacturing shrinks, raising questions for Trump

Source: The Hill | August 17, 2019 | Niv Elis

The risks of an economic recession are on the rise, but the country’s manufacturing sector is already there.

And for President Trump, who promised to end the “American carnage” of “rusted-out factories scattered like tombstones across the landscape of our nation,” that could be political trouble.

The manufacturing sector shrunk by 1.9 percent in the first quarter of the year, and another 1.2 percent in the second quarter. In July, it is estimated that it contracted 0.4 percent. A recession occurs when an economy contracts in two consecutive quarters.

Trump won the Electoral College and White House by becoming the first Republican in a generation to sweep the states of Pennsylvania, Wisconsin, and Michigan.

He’ll likely need to do so again in 2020 to win reelection, and the bad economic news in manufacturing could be a dilemma in these Trump states.

Trump vowed to help manufacturers, and the sector did enjoy a banner year in 2018 after Trump’s corporate tax cuts took effect.

Manufacturing jobs grew at an average rate of 22,000 a month in 2018.

This year, even as the sector have contracted, manufacturers have continued to add jobs, but at a much slower rate of 8,000 per month.

The slowdown is attributed in part to growing trade tensions and slumping growth in foreign markets which has hit manufacturing around the world.

“It’s pretty clear, not just in the U.S. but globally, that the manufacturing sector is contracting right now,” said Chad Moutray, chief economist of the National Association of Manufacturers. 

Trump’s escalating trade war with China, in particular, is dragging on the industry, according to an analysis from Moody’s Analytics last week.

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