VIDEO: All Signs Point to Trouble for Manufacturing in 2016

Where are Trump and Clinton on Trade and the Economy?

With both the Republican and Democratic national conventions in the books and the Trump/Clinton showdown set, it’s time to get down to party platforms and issues. Or is it?

Somewhere in between Hillary’s emails, Muslim terrorists and which bathroom transgendered Americans should be allowed to use, there’s an important issue that is left to the wayside: manufacturing.

We know that manufacturing is struggling in America. Take a look at these graphs from the Federal Reserve posted on zerohedge.com:

(Image courtesy Zerohedge.com.)

(Image courtesy Zerohedge.com.)

Income, assets and net worth are all down for American families and it’s even tougher for those trying to start one.

The US Census Bureau has reported that the national home ownership rate is down to 1965 levels. The US is rapidly becoming a nation of renters, at a time of historically low interest rates. Why does this matter? Because renters don’t tend to furnish, restore, renovate or decorate their homes as much as owners do, dragging down demand for manufactured goods from paint to major appliances.

But at least they buy cars, right? Look at this chart from Lee Adler by WallStreetExaminer.com:

(Image courtesy WallStreetExaminer.com.)

(Image courtesy WallStreetExaminer.com.)

Sales are up, but not compared to population growth. Sales per thousand are on a downward trend and have been for years.

But we have falling unemployment, right? Look at this graph of the labor participation rate from the Department of Labor’s Bureau of Labor Statistics:

(Image courtesy the Department of Labor's Bureau of Labor Statistics.)

(Image courtesy the Department of Labor’s Bureau of Labor Statistics.)

Not counting those who’ve given up looking for work is at best disingenuous and at worst fraudulent, but that’s the way the media reports employment today. 4.9 percent unemployment? Not a chance.

What we’re seeing in these graphs is the progressive impoverishment of America due to the willful abandonment of the US manufacturing infrastructure. The drive to more free trade with low wage nations hasn’t worked the way the economists and Wall Street thought it would. Better paying service and knowledge industry jobs have been few and reserved for a small percentage of the best educated in America.

It’s become a death spiral: lower wages and more unemployment are mitigated by lower prices for imported manufactured goods, i.e. Wal Mart and Dollar General.

Even if we could bring manufacturing back, there’s insufficient disposable income to purchase the goods anyway. It’s a prescription for stagnation, unless someone starts thinking about ways to increase the number of working Americans and also increase their take-home pay.

It’s that simple. If this isn’t fixed, the US will have bigger problems than a declining manufacturing sector.

Ordinary Americans know this too and this is fuel for Trump’s campaign. Clinton needs to figure this out and address it, soon. Scrapping the Trans Pacific Partnership would be a logical first step, followed by a commitment to free trade with nations that share similar wages, living standards and tax burdens with US businesses, as well as guaranteeing fair access to trading partner’s markets.

This problem is bigger than terrorism, bigger than illegal immigration and if unchecked, might lead to social breakdown of the kind not seen since the 1960’s. Trump and Clinton are listening right now, so it’s a good time to call out their campaigns and ask what steps they’ll take to fix this most important problem.

Written by

James Anderton

Jim Anderton is the Director of Content for ENGINEERING.com. Mr. Anderton was formerly editor of Canadian Metalworking Magazine and has contributed to a wide range of print and on-line publications, including Design Engineering, Canadian Plastics, Service Station and Garage Management, Autovision, and the National Post. He also brings prior industry experience in quality and part design for a Tier One automotive supplier.