Thursday, September 12, 2013

US Manufacturing: Overstated?

Interesting little item here at Manufacturing News.

...Substituting imported products for those that were domestically produced "resulted in an overstatement of the annual growth in real value added by 0.2 percentage points to 0.5 percentage points per year from 1997 to 2007," according to the Upjohn/MIT research. This might not sound like a lot, but it is huge, "implying that real value-added growth was upward biased by as much as 50 percent" for the majority of U.S. manufacturing during that period, says the study. "Estimates on the bias from materials offshoring to multifactor productivity ranged from about 0.1 to 0.2 percentage points per year for all of manufacturing and about 0.2 to 0.4 for the computer and electronics industry."...

Seems that the number-crunchers at BLS haven't secured funding to put up an accurate measure of import-substitution.

This is not a small item; estimates range up to a FIFTY percent overstatement of US manufacturing output.  And that explains something else:

This statistical lapse is the likely reason why productivity rates have increased, but wage gains have not -- a situation that poses an intellectual quagmire for most economists who have been ignorant about the statistical anomalies associated with globalization's impact on the United States....

So the price-inflation item (below) becomes even more ...ahhh.....ugly.

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