South By North Strategies, Ltd.

Fed Watch is concerned about the decline in the United States’ productive capacity.

In short, I continue to worry that policymakers are ignoring the possibility that increasing reliance on external production to satisfy US demand has contributed significantly to the jobless recoveries we have seen this decade.  Something is very different this decade.  I think it is a mistake to write off this decade’s shift in manufacturing as simply a repeat of the agricultural experience.  At least agricultural output continued to rise as its relative  employment importance fell.  The capacity numbers are telling us the same can not be said of manufacturing any longer. And in the past, the relative decline in manfacturing jobs was matched by a more than corresponding increase in service sector jobs.  No longer the case; job growth is flat for a decade.  If we intend to ignore this issue, the supposed reality of tradable services had better get a lot more traction very quickly. Otherwise, we are further solidifying a permanent underclass of citizens who require the constant support of fiscal authorities.