Economic Outlook n° 1187 | Special Report | The Reindustrialization of the United States
Euler Hermes
Over-performing in the aftermath of the crisis to regain higher ground
▶ Manufacturing rebound in the aftermath of the crisis By the end of 2011, U.S. GDP had recovered to levels just before the recession started in the fourth quar- ter of 2007. This recovery has been boosted by a substantial contribution from the manufacturing sector. In 2010, manufacturing was only 12.4% of the economy, yet it accounted for 44.6% of its growth. In 2011, those same proportions were 12.8% and 37.2%. From this perspective, manufacturing indeed led the economy out of the severe recession of 2008 and 2009. Furthermore, as shown in Figure 8, the only sector to provide slightly more growth in 2010 and 2011 was the entire services sector, which is six to seven times larger than the manufacturing sector.
Figure 9 demonstrates that since 2001 the U.S. manufacturing sector has shown higher sensitivity to the economic environment than the services sector has. It displays the annual increase in value added by sector, highlighting how much manufacturing fell during the recession and how rapidly it has reboun-
ded since. Manufacturing has dramatically outpaced services for the last two years and has fully demons- trated its role as the engine of the economic recovery. The only sector to fall more steeply than manufac- turing was construction, which plummeted as a result of the burst housing bubble, and has still yet to fully recover.
IIn the wake of the decline caused by the economic crisis, the manufacturing sector has been a modest contributor to the improvement of the employment scenario. However, this tepid increase of manufac- turing employment also signaled the end of a conti- nued decline which has been ongoing for decades.
◾◾◾
8. Contribution to U.S. GDP Changes by Sector
-5% -4% -3% -2% -1% 0% 1% 2% 3% 4%
9. Annual Change in real value added 12%
Service
Manufacturing Construction Mining
Agriculture 2001 2002 2003 2004 2005 2006 2007 Source: Bureau of Economic Analysis 2008 2009 2010 2011
-15% -12% -9% -6% -3% 0% 3% 6% 9%
2001 2002
Services Manufacturing
Construction 2003 2004 2005 2006 2007 Source: Bureau of Economic Analysis 2008 2009 2010 2011
C. Contribution of the manufacturing sector to US economic growth 2001
2002 Part in U.S. GDP (in %)
Manufacturing part in economic growth
GDP in real value; ( ): negative Source: Bureau of Economic Analysis