In the wake of the pandemic, US president Joe Biden focused on making it possible for the US to produce more of what it needs to protect its economy and national security. As a result, he delivered on one of former president Donald Trump’s campaign promises: to bring manufacturing back to the US.
While we wait to see if the US actually produces more electric vehicles, semiconductors, solar panels, and other goods needed for a more economically independent (and lower carbon) future, a good sign that the US is headed in the right direction is what kind of spending we can see in the manufacturing sector.
As economics blogger Noah Smith recently noted on his Substack, from June 2022 to April 2023, construction spending in the manufacturing industry jumped from $90 billion to $189 billion. The timing of this doubling nicely corresponds with the passage of the CHIPS Act and the Inflation Reduction Act, both of which were signed into law in the summer of 2022.
The activity is so strong that manufacturing is the only major category within the US construction market that’s spending at a pace that’s beating inflation, outstripping spending on construction for offices, healthcare, and education purposes.
The economy is stronger when the government spends and incentivizes the private sector to spend, too
As a result of all this investment, construction employment in the US remains at record levels—construction workers who may have been laid off because of the contraction in the housing market are likely able to find new jobs—and demand for other skilled trades is climbing. (For instance, there’s never been a better time to be an electrician in the US.)
And this spending by the private sector has propped up the gross domestic product (GDP) of the US, keeping overall growth and the labor market strong even as parts of the economy slow down.