Since the “Great Recession” ended in June of 2009, America’s economy has rebounded slower than desired, but is still doing better than the rest of the world thanks to manufacturing.
According to Senior Economist William Strauss of the Federal Reserve Bank of Chicago, manufacturing in the United States has recaptured 116% of its production loss, while averaging 4.9% growth annually. U.S. manufacturing utilization, which fell below 64% in 2009, has risen to nearly 80%—a level not reached since the economic boom of the 1990s.
Even though U.S. manufacturing has recaptured only 38.2% of its jobs loss due to increased worker productivity and technology gains, such industrial growth has contributed to a steadily declining unemployment rate that the Federal Reserve Bank is projecting to return to the historical norm of 5.2% by 2017, if not 2016. In Illinois, the 6.2% year-end unemployment rate remained higher than the 5.7% national average. State rates for January were scheduled for release on March 17.
The revival in the U.S. automotive industry—which is a major economic engine in DuPage County municipalities such as Aurora, Elmhurst, Lisle, Naperville and Westmont—has driven much of manufacturing’s rebound and allowed the Midwest to recover at a faster pace than the rest of the country. Light vehicle sales of 16.4 million units are at pre-recession levels. With the average age of a U.S. auto at 11 years old, vehicle sales are forecast to increase 3% in 2015 and 1% in 2016 to around 17 million units—a level not surpassed since the new millennium.
Motor vehicles and parts has grown nearly 150% since June of 2009, while primary metals, computer and electronic components, machinery and durable goods are up 50% to 70%. Fabricated metal products, plastics and rubber products, manufacturing, wood products, miscellaneous durable goods and electronic equipment, appliances and components are up at least 25%.
While orders, production and hiring are slower to start 2015 than in 2014, manufacturing is still growing and expanding. Industrial production is forecast by the Fed to increase at a pace above trend at 3.4% in 2015 and 3.2% in 2016, which would outpace the growth forecast in the U.S. economy or Gross Domestic Product (GDP) of less than 3%.
With only 5% of the earth’s population, the U.S. still accounts for 24% of the world’s manufacturing production—compared to 25% in 1970—with China a distant second at 16%.