Abstract
To understand the performance of the U.S. manufacturing sector, in this article, we explore the performance of individual industries. We first use the U.S. Bureau of Labor Statistics published data to look at the influence of industries on sector-level performance and total factor productivity (TFP) growth. The underlying dynamics of production in any given industry determine its influence on the sector as a whole. Both an industry’s share of output and its individual TFP growth vary over time, and these changes jointly determine the industry’s contribution to performance in the manufacturing sector. Next, we trace the contribution of industries to manufacturing sector TFP by using three alternative output concepts—value-added output, sectoral output, and gross output. We examine the differences in industry contributions that result from the use of the alternative output measures, over 2000–21 and three different business cycles (2000–07, 2007–19, and 2019–21). We show that one must carefully deliberate before selecting a value-added-output, sectoral-output, or gross-output framework for TFP and contribution analysis.
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