The Brutal Truth About America’s Manufacturing Decline
It’s astonishing that despite an unfathomable $6 trillion in new money printed by the Federal Reserve, America’s manufacturing output is still plummeting. Currently, the US index for manufacturing stands at a dismal 101.39—nearly 5% lower than it was just before the financial crisis in December 2007. This isn’t just a glitch; it’s a systemic failure.
For 18 long years, American manufacturing has been shrinking, all while the Fed has recklessly flooded the economy with cash. Contrast this with the vibrant industrial growth from 1972 to 2000, where production soared almost 150%. The Fed’s misguided monetary policies have utterly devastated the manufacturing sector, with inflationary measures suffocating potential deflation that was desperately needed.
Today, competitive global markets are brutal. Manufacturing wages in the US are simply unsustainable compared to countries like Vietnam ($3.50), India ($4.50), and Mexico ($5.00). Just look at the stark wage differences: US manufacturing workers earn an average of $44.25 per hour, far exceeding wages in competitor nations. It’s no surprise that American factories are struggling to keep up.
America is priced out of the market. Chronic trade deficits, soaring to an annual level of $1.2 trillion in 2024, confirm this harsh reality. The US has watched its trade balance deteriorate tenfold over the past 30 years. This is not because our trading partners suddenly turned unfair; it’s due to the Fed’s disastrous policies.
The deepening wage gap has roots in the early ’90s, when the Fed, under Alan Greenspan, opted for monetary central planning. The nominal wages may have risen, but adjusted for inflation, workers have made virtually no progress in three decades. This monumental failure is handcuffing the American worker and obliterating our manufacturing base.
Doubt the efficacy of the Fed’s policies? Consider this: unit labor costs in US manufacturing have surged 53% since 2007, directly correlating with a drastic drop in our trade deficit. The harsh truth is that America has needed rigorous deflation to remain competitive—but the misguided printing press mentality prevails.
What’s more troubling is the Fed’s insistence that a modest 2% inflation rate is necessary for prosperity. This arbitrary target lacks any historical validity or sound economic rationale. It serves merely as a convenient excuse for unchecked money printing that benefits Wall Street and the DC elite.
Industrial production is the backbone of a prosperous economy and the key to real gains in living standards. Yet, our leaders have embraced a flawed Keynesian model that prioritizes aggregate demand over the hard realities of a competitive global market.
The Fed’s policies have narrowed the path to recovery, yet they march forward undeterred, convinced that repeating the same destructive actions will yield different results.
America’s industrial sector is hollowed out. The risks are monumental, but as history shows, crises also present unparalleled opportunities. Those who grasp the changing dynamics can still find a way to thrive amidst the chaos. It’s high time for a serious reevaluation of our monetary strategies before we sink even deeper into this malaise.
