Strength in Numbers

Abstract

This article highlights that today, however, American factories are in decline; their products cannot compete internationally, and they are being overtaken by global competitors. US manufacturers not only face very real challenges, but they also have their share of success when compared with many of their counterparts in other countries around the globe. Economists spend a lot of time arguing about the trends behind the data. Yet the debate takes place against a changing background. The US economy has grown more international and more globally integrated than anyone could have imagined 30 years ago. Federal Reserve economists use marketplace feedback to place a value on such added capability, and that is the number that shows up in the IP Index for computer and electronic products. Subtract computers from the index for the manufacturing sector, and the numbers look very different. Hence, manufacturing output should include computers and electronics, but subtracting them from the total provides a very different picture of the rest of the manufacturing economy.