I shouldn’t have done it, but I did. At the midpoint of 2020, I researched GDP economic growth outlooks for the year. The International Monetary Fund June 2020 Update is typical—selected economies (30) representing about 83% of world output shows all but two (China and Egypt) have negative GDP growth rates. The U.S. is projected at -8% for 2020 and for 2021, the projection is 4.5%.
After four months of declines that led U.S. manufacturing to its lowest level since 2009, the Institute for Supply Management’s (ISM) survey dropped to 41.5 and climbed back to 43.1 in May driven by the new order index jumping to 31.8 from 27.1. Glass half-full observers read May results as a transition to stability, although half-empty viewers, many brain-numbed by weeks of social distancing, cautioned that industry was still in contraction territory.
According to United Nations COMTRADE, the top five countries receiving U.S.-manufactured goods are Canada, Mexico, China, Japan, and the UK. All except China are in negative GDP growth territory. The U.S. did $1.6 trillion in 2019, and Canada and Mexico make up 57% of imports. Not much growth opportunity there right now.
What about China? Yeah, what about China, a $100 billion-plus importer—are we still speaking? A presidential election is coming up in a bit over four months. In normal times, administrations push the trade buttons to brag about export numbers, but these are not normal times in Sino relations—the Coronavirus may have had something to do with that.
Word on the street is that U.S. recovery from COVID-19 may take years, assuming the feared second wave is a myth. However, trying to work off this debt is what keeps the wheels of commerce moving here in the U.S. And if manufacturers can find the people they need, the good times can roll again. The problem is that they haven’t been able to do it lately, and that’s another story to which automation and industrial laser processing may have the answer.
My Dad was a union man—not by choice, but he occasionally thought his only son might be the devil incarnate, running around touting automated laser processing in manufacturing contributing to unemployment. Actually, I’m told that in his later days in the nursing home, he used to lead the men’s discussion group bragging about his son’s lasers building cars.
I must say that working remotely allows more free time to think about these deep questions. And you, respected reader, by default are my sounding board. What’s your view?