The US economic data for the first three quarters of 2023 presents an impressive picture, especially amid the backdrop of the Federal Reserve's continued interest rate hikes. These measures have seemingly yielded significant policy achievements, with record highs in the stock market, a continuous decline in the unemployment rate, and robust growth in the gross domestic product (GDP). However, a closer examination reveals underlying issues.
Historically, manufacturing played a pivotal role in propelling the United States to global economic prominence. Yet, with the ascendancy of financial capital, manufacturing has been gradually marginalized. The 2008 financial crisis prompted a renewed emphasis on manufacturing, leading to the Obama administration's "revitalization strategy." President Biden further supported domestic manufacturing with legislative measures. According to Fed's economic data, US manufacturing investment surged from $133.2 billion at the end of 2022 to $194.3 billion in May 2023, contributing approximately 0.4 percentage points to the first-half GDP growth.
However, a puzzling divergence emerges when examining electricity consumption and economic growth. While the US GDP increased by 2.3% year-on-year in the first half of 2023, national electricity consumption fell by 3% year-on-year. The "Short-term Energy Outlook" from the US Energy Information Administration predicts further declines in electricity consumption across residential, commercial, and industrial sectors. Despite the manufacturing revitalization strategy, employment in the sector has stagnated at around 13 million jobs since January 2023, raising questions about the true impact of the purported "super cycle."
Examining data from Texas, a manufacturing powerhouse, reveals a similar trend. Factory activity in the state contracted in August 2023, as reflected in indices such as production, new orders, capacity utilization, shipments, and capital expenditure. Notably, these indicators point to a decline in manufacturing activity, contradicting the narrative of a robust resurgence.
Logistics data also challenges the narrative of a rapid economic recovery. Figures from UPS and FedEx suggest a contraction in the overall express delivery market, questioning the sustainability of the reported economic upturn.
The employment landscape adds another layer of complexity. Despite significant layoffs in the technology industry, the US employment data continues to show a positive trend, with the unemployment rate reaching historic lows. Discrepancies between different sets of employment data, notably in September, raise concerns about the accuracy of reported job growth. Economists, including Mark Zandi, suggest that actual job growth may be substantially lower than official figures indicate.
The impressive economic data may not tell the whole story, and a comprehensive analysis is crucial to understanding the true state of the US economy.
The article is an English translation of an excerpt from an article written by Song Xiaojun, vice dean of China Construction Bank University and Yu Xiang, a senior expert of China Construction Bank University.
