J
obs and the mounting political pressure of the jobless recovery seem to have put trade
and the US manufacturing malaise on Washington’s agenda. The reality of entering an election year
with shifts in the Solid South, a host of candidates from the Democratic Party taking hold of the
issues, and jobless numbers that harken back to Herbert Hoover have actually gotten Washington’s
political juices flowing.
Apparently, the first volley from the Bush administration will include a new “manufacturing
czar,” repackaged tax cuts and an increase in political rhetoric from the likes of Secretary Donald
Evans at the Department of Commerce.
Continuing pressure on yuan revaluation has taken on additional political steam, with Sens.
Elizabeth Dole, Lindsey Graham and Charles Schumer introducing a bill that will impose tariffs of
27.5 percent on imports of Chinese goods if China does not float its currency within 180 days.
China is not apt to move quickly, and China’s refusal to accommodate Treasury Secretary John Snow’s
request during his recent visit won’t help candidate Bush sell the free trade relationship as more
than a political necessity.
The political realities of the current trade agenda may in fact be the trigger of change.
The gap between many pundits’ view of the overall economy and the effect on voters in a political
economy continues to widen. Predicted increased profits in the fourth quarter across many S&P
500 stocks, without major increases in revenue, point to continued productivity gains. Good for
stocks, not promising for employment, and not lifting all boats — after all, employment is noted as
a lagging indicator, which, absent structural shifts in the US economy, may be the case. The “
joblessness” of this recovery, however, begs consideration of those structural shifts affecting
employment.
If US manufacturing jobs continue to erode, and the “multiplier” jobs associated with
supporting domestic manufacturing drain away, the ability of the US service economy to overcome
this shock will be telling.
Economists were surprised that total nonfarm payroll employment declined by 93,000 jobs in
August and the number of factory jobs decreased by 44,000. It is a troubling report, even more so
because it was a surprise. According to the US Department of Labor, since July 2000, manufacturing
employment has declined continuously, shedding nearly 16 percent of its jobs. In August, wood
products, machinery, apparel, and electrical equipment and appliances each lost 5,000 jobs.
Employment declined by 12,000 in the textile industries.
If employment is a lagging indicator — does that ensure that the unemployed are lagging
voters?
October 2003
