Here's the good news
Wikimedia Commons
But here's the good news: the US economy's most important growth driver is still booming.
"Weakness in manufacturing, however, is not news, unless you've been asleep all year," Pantheon Macro's Ian Shepherdson wrote in a note on Thursday.
"The sector is being hammered by the strong dollar, weaker growth in EM export markets, and the rollover in oil firms' capex... But it is a small part of the economy, 12% of value added and 9% of employment. It fills the front pages but it is much less important the domestic services sector, which is 5.6 times bigger, and, more to the point, booming."
And so in short, the US economy's engine is not manufacturing, but the consumer. And the things that have been bad for manufacturing have been good for consumers.
A strong US dollar pressures exports and the purchasing power of many international partners manufacturing businesses depend on, while giving consumers a boost. The crash in oil prices has also pressured manufacturing jobs while providing relief to consumers.
Real consumption this year is up 3% over last year, and with consumer spending accounting for about two-thirds of GDP growth, this is the real story and the one driving the US economy towards its best year since before the financial crisis.
- US buys 81 Soviet-era combat aircraft from Russia's ally costing on average less than $20,000 each, report says
- 2 states where home prices are falling because there are too many houses and not enough buyers
- A couple accidentally shipped their cat in an Amazon return package. It arrived safely 6 days later, hundreds of miles away.
- SC refuses to plea seeking postponement of CA exams scheduled in May
- 10 exciting weekend getaways from Delhi within 300 km in 2024
- Foreign tourist arrivals in India will cross pre-pandemic level in 2024
- Upcoming smartphones launching in India in May 2024
- Markets rebound in early trade amid global rally, buying in ICICI Bank and Reliance