Cyclical manufacturing trend or fundamental concern?

Following a recent Reuters report that “United States manufacturing declined in May for the fourth consecutive month while inflation surged to the highest in four years, heightening fears of stagflation,” said Daniel Ikenson, associate director of the Cato Institute’s Center for Trade Policy Studies.

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Following a recent Reuters report that “United States manufacturing declined in May for the fourth consecutive month while inflation surged to the highest in four years, heightening fears of stagflation,” said Daniel Ikenson, associate director of the Cato Institute’s Center for Trade Policy Studies. He was speaking at the May meeting of the Automation Federation (AF). “Reports of slowing output in the manufacturing sector reflect sluggishness in the overall economy. Although the sensational conclusion is that this decline in output is further evidence of the 'hollowing out’ of American manufacturing, it is nothing more than a cyclical fact of economic life,” he said.

Ikenson contends that the basics remain strong: “All relevant statistics for measuring the health of the sector—revenues, profits, output, value-added return on investment—have been trending upward for years and will continue to trend in that direction barring shortsighted policy intervention.”

If policymakers are to do anything to help manufacturing, Ikenson continued, “The Federal Reserve should return to fulfilling its mission of price stability. Fighting inevitabilities of the business cycle through easy money policies are driving up costs to American producers and consumers through the return of inflation.”

Meanwhile, Automation Federation representatives met with elected officials and policymakers to express concerns about: manufacturing workforce development and the “impending crisis” in automation; the need to create more two- and four-year automation engineering curricula; and the necessity of an informed cyber security policy in defense of the U.S. industrial infrastructure.

At the May meeting, teams were organized to address several issues affecting industry. These meetings are summarized in an AF Capitol Blog at automationfederation.org/capitolblog .

www.automationfederation.org

www.cato.org