U.S. Manufacturing Has Shrunk
Manufacturing is decreasing its contribution to the U.S. economy, according to The Wall Street Journal.
20 years ago manufacturing made up 16 percent of the U.S. gross domestic product (GDP), but now manufacturing makes up only 11 percent of U.S. GDP. Factory workers made up 13 percent of the overall workforce in the U.S., but now only 8.5 percent of the workforce works in factories.
Economists are now speculating over whether the U.S. economy is large and diversified enough to sustain its growth even if manufacturing experiences a downturn. “Being less exposed to manufacturing and the global manufacturing cycle is providing some stability to the U.S. economy,” said Gus Faucher, chief economist at PNC Financial Services.
The rest of the sectors in the economy are relatively solid. The economy grew at an annualized rate of 1.3 percent in the third quarter, which decreased from the second quarter but continued the growth. Although, the manufacturing decline should not be completed looked over.
“Obviously if it becomes a more severe [manufacturing] contraction, that creates a more severe problem for the economy,” Mr. Faucher said. “Risks are amplified now because of trade tensions, because of slower economic growth, because of business uncertainty.”
U.S. manufacturing is declining, but the overall economy is expanding. Although, it should not be looked over as it could spread to other sectors.
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