But perhaps most ominous are signs that domestic manufacturing is on the cusp of a full-blown sectoral recession. Output has declined for five months, no doubt due to uncertainty over interest rates, as well as the debilitating shortage of skilled workers. The contraction, however, isn’t merely a reflection of Federal Reserve policy reinforcing supply-side choke points, which has undercut Team Biden’s efforts to reshore industry. In fact, production has been largely anemic since at least the slump of 2019; according to the Institute for Supply Management, a leading industry association, a 13-month stretch from 2022 to 2023 was the longest downturn since 2000-2002, when Permanent Normal Trade Relations with China went into effect. ...
These patterns should be of grave concern to progressives—as a matter of politics and policy. A similar, overlooked downturn late in President Barack Obama’s second term likely contributed to Hillary Clinton’s defeat in Pennsylvania, Michigan, and Wisconsin in the 2016 election. That, along with her campaign’s astounding indifference to the industrial Midwest, practically cemented the view among many working-class whites that today’s Democrats have abandoned their New Deal roots. Although the Harris-Walz ticket appears to be sustaining momentum and has trained its focus on preserving the “Blue Wall,” unanticipated headwinds in battleground counties could spell the same fate as Clinton’s. ...
The reality is that dozens of counties reeling from job losses have effectively experienced what many wage-earners rightly feared: stagflation. In more rural regions, peak inflation was higher than the national average, a trend which spread from the South to the postindustrial Northeast. Its toll undoubtedly compounded the sense of helplessness among rural households, who tend to pay more for groceries and other staples. Mainstream liberals seem reluctant to acknowledge as much. ...
An economy pockmarked by mini-regional downturns, moreover, belies headlines heralding a manufacturing renaissance.
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