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U.S. manufacturing still matters when evaluating the U.S. and global

economy. While manufacturing as a percent of the U.S. economy has

declined steadily since the end of World War II, its impact is greater than

its size. Manufacturing tends to be more cyclical than service activity, and it

remains a bellwether for the overall economy. S&P 500 Index companies are

heavily skewed toward manufacturing-related activity and changes in earnings

growth rates tend to track manufacturing activity. U.S. manufacturing has also

become increasingly focused on high-tech industries that invest heavily in

research and development. Finally, manufacturing still matters for the global

economy — manufacturing has shrunk as a percent of the U.S. economy for

decades, but the U.S. economy has also been growing over that period, helping

manufacturing expand over the last several decades [Figure 1]. To this day,

the U.S. remains the second largest manufacturer in the world. In this week’s

commentary, we take a look at recent data on U.S. manufacturing.



View the full weekly economic commentary here.

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