Was manufacturing already in crisis?

Pete Buttigieg: "America in a Manufacturing Recession Pre-Pandemic"

Statement: "America went into a manufacturing recession before the pandemic." - Pete Buttigieg, Transportation Secretary and surrogate for the Biden-Harris administration, in a Fox News interview.

Buttigieg's recent interview on "Fox News Sunday" critiqued Trump's economic record, including broken promises on growth and infrastructure. Buttigieg, a potential VP pick, highlighted the pre-pandemic manufacturing slump, hurting industrial areas like his hometown in the Midwest.

Data and Economic Perspective:

The definition of a "recession" for the entire economy is clear, decided by a committee of economists at the National Bureau of Economic Research. However, defining a recession for a specific sector like manufacturing is less straightforward, with no official arbiter.

Analyzing the data:

• Employment Levels: Manufacturing employment rose modestly (~3.3%) during Trump's pre-pandemic presidency. But it flatlined in 2019 and dipped slightly by March 2020.
• Output of Manufactured Goods: This metric shows a clearer recessionary trend. Manufacturing output peaked in Q3 2018 but slowed and turned negative in Q1 2019 due partly to the trade war with China. This decline persisted for the next four quarters.
• Federal Reserve Data: The industrial production index mirrored this pattern, falling ~2.4% from August 2018 to February 2020.
• Expert Opinions: Economists like Douglas Holtz-Eakin, Tara Sinclair, and Gary Burtless concur with a pre-pandemic manufacturing downturn, as reported by media outlets like The Washington Post, CNN, and the LA Times.

PolitiFact Ruling:

There is no sector-specific recession definition, but by examining employment and output, a downturn in the manufacturing sector is evident before the pandemic. While not a severe recession, Buttigieg's statement is supported by data and expert opinions, earning a "Mostly True" rating.

Sources:

• Buttigieg, P. (2024, July 28). Interview on "Fox News Sunday."
• Federal Reserve Bank of St. Louis. (n.d.). All employees, manufacturing.
• Federal Reserve Bank of St. Louis. (n.d.). Manufacturing Sector: Real Sectoral Output for All Workers.
• Federal Reserve Bank of St. Louis. (n.d.). Industrial Production: Total Index.
• National Bureau of Economic Research. (n.d.). Business Cycle Dating.
• The Washington Post. (2020, January 17). U.S. manufacturing was in a mild recession during 2019, a sore spot for the economy.
• Sinclair, T. (2024, July 29). Email interview.
• Burtless, G. (2024, July 29). Email interview.