Where Will the Jobs Come From?

John Mauldin |

There is a continual complaint that US manufacturing has been "hollowed out." Where manufacturing jobs once were tickets to the middle-class lifestyle, there are now fewer and fewer such jobs available. Indeed, the next chart shows that manufacturing jobs are down almost 40% from the peak in 1978 and back to roughly where they were during World War II.

Graph of All Employees: Manufacturing(Click to Enlarge)

Yet the number of manufacturing employees doesn't tell the whole story. The US is still the number one manufacturing country in the world. We are an export powerhouse. Indeed, the growth of exports in the last 20 years has been nothing short of phenomenal. Exports have doubled and then doubled again. Total manufacturing in the US has almost come back to where it was prior to the Great Recession. Productivity in the last 20 years is up over 50%. We are producing as much as or more than we did in the past but with far fewer people. Taken alone, US manufacturing would be the ninth largest economy in the world. See the next three charts:

Graph of Exports of Goods and Services(Click to Enlarge)

Graph of Value of Manufacturers' Shipments for All Manufacturing Industries(Click to Enlarge)

Graph of Value of Manufacturers' Shipments for All Manufacturing Industries(Click to Enlarge)

The chart below shows the average growth in productivity over various periods during the last 65 years. Note that after the postwar boom productivity growth fell and then began to increase again, up until the Great Recession. Greenspan was right to call it the Productivity Miracle.

Nonfarm business productivity bar chart(Click to Enlarge)

This is a highlight from Thoughts from the Frontline, a free weekly publication by John Mauldin, renowned financial expert, best-selling author and Chairman of Mauldin Economics. Each week John provides his insightful analysis on Wall Street, the global markets and the rapidly changing world economy. Join his over one million readers today! www.frontlinethoughts.com.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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