In recent decades, the US has grown increasingly dependent on imports from China to access a vast variety of goods. The FRED graph above shows Chinese import data: From 1990 through 2016, as China became a globally integrated economy, the US import share from China grew steadily, from close to 2% of aggregate US imports in the late 1980s to close to 22% in 2016.

In recent years, however, policies have been enacted to reduce this dependence on China, as illustrated by the trade war during the Trump administration and the CHIPS and Science Act of 2022. Indeed, the US import share from China has declined from 22% to 14% since 2016.

As the cost of importing Chinese goods has increased, the incentive to produce goods domestically has also increased. So, to what extent is the US-China decoupling leading to a resurgence of American manufacturing? We investigate this question in the FRED graph below, plotting manufacturing investment in structure and equipment, as well as employment and output.

On the one hand, there has been a resurgence of manufacturing investment in structures since 2020. These investments may indicate that American manufacturing overall is indeed resurging, with investments in structures more than doubling in a short period.

On the other hand, output, employment, and investments in equipment haven’t increased in tandem with the growth of investment in structures. We interpret these findings as evidence that American manufacturing may be resurging, but that the resurgence may take time: Investment in structures is time-intensive and precedes the growth of employment and output that results once new manufacturing plants are completed.

How these graphs were created: First graph: Search FRED for and select “U.S. Imports of Goods by Customs Basis from China.” From the “Edit Graph” panel, use “Edit Line 1” to add “U.S. Imports of Goods by Customs Basis from World” to the existing series. Under “Customize data,” type a/b into the formula bar, and click “Apply.” Set “Modify Frequency” to “Annual.”
Second graph: Search FRED for and select “Real private fixed investment: Nonresidential: Structures: Manufacturing/Real Gross Domestic Product.” From the “Edit Graph” panel, use “Add Line” to add “Real Gross Private Domestic Investment: Fixed Investment: Nonresidential: Equipment,” “Manufacturing Sector: Real Sectoral Output for All Workers,” and “All Employees, Manufacturing.” Under the “Edit Line” tab for each of the four lines, change the “Units” to “Index (Scale value to 100 for chosen date)” and enter “2010-01-01” for the base period.

Suggested by Jason Dunn and Fernando Leibovici.

Obviously, major wars take their toll on a country’s population. They also affect economies in distinct ways. For example, wars affect the manufacturing sector as firms ramp up production of military vehicles, munitions, and the like. The current war in Ukraine, while far away from the United States, may still be having an impact here, given that the United States has promised military equipment to Ukraine. Other countries have done the same and are also ramping up their own purchases. FRED has some related data (at least back to 1994) that may help show what’s happening on the manufacturing front.

The Manufacturers’ Shipments, Inventories, & Orders survey from the U.S. Census Bureau doesn’t detail the defense sector, but it does provide data on manufacturing with and without defense. So, we can graph the difference.

The first graph shows new orders. If the war was a complete surprise and governments are only now scrambling to acquire military equipment, we’d expect new orders to be significantly up. At the time of this writing, that does not appear to be the case. But maybe they had enough foresight and are taking deliveries now. The second graph looks at shipments. While there’s an increase, it appears to follow a trend that predates the Ukraine war quite a bit.

Another impact could be that the new demand for armaments is reducing manufacturers’ inventories. Our last graph looks at this, and inventories are actually up. Could this be in anticipation of increased demand in the near future? We can’t tell simply by looking at the graphs. So, in conclusion, we don’t see any hard evidence that this war has had any notable effect on U.S. manufacturing yet.

How these graphs were created: For each graph, start by searching FRED for the series (say, manufacturers inventories) adding the “defense” keyword to narrow the results. Once you have the graph, click on “Edit Graph,” add the other series by searching for the same keywords without “defense,” and apply formula b-a.

Suggested by Christian Zimmermann.

As economies develop from their agrarian roots into modern societies, they invariably go through a similar transition.

• Agriculture: First, everyone works in the primary sector—agriculture—simply to survive. Food comes first.
• Industry: As subsistence farming becomes more productive through innovation, some labor is free to engage in other productive activities. And this secondary, industrial sector rises in importance, with manufacturing as a major component. Consider the Industrial Revolution!
• Services: Finally, as productivity in the industrial sector also improves, labor can be devoted more and more to the tertiary, services sector. It doesn’t produce anything tangible, but services are clearly still useful.

The FRED graphs in this post show the fraction of the labor force devoted to each of these three sectors for five countries: Japan, Chile, the United States, South Africa, and Mexico.

Some of the transitions from one sector to the next can be seen even in the relatively short period that FRED data can cover. It’s more noticeable, however, if you compare countries: The more advanced countries have a small primary/agricultural sector and a large tertiary/services sector. The importance of industry (e.g., manufacturing) really depends on the state of the economy. Poorer countries (with less data available from FRED) and richer countries both have much less industry; it’s the middle-income countries that have a fair share.

How these graphs were created: Start from the OECD Main Economic Indicators by country release table, click on the country of choice, find the labor survey (if available), select quarterly seasonally adjusted data, check the three sectors, and click on “Add to Graph.” Finally, from the “Edit Graph” panel, use the “Format” tab to chose graph type “Area” with “Percent” stacking. Sample dates may need to be adjusted in cases of missing data.

Suggested by Christian Zimmermann.