By
Chris Buchheit on September 1, 2010
You’re going to be hearing a lot about the BRIC countries for several years to come. BRIC stands for the emerging economies in the world – Brazil, Russia, India, and China – and they’re the ones whose manufacturing is keeping the world economy afloat. A recent article by the Associated Press reveals that within these countries, when their manufacturing figures are in the positives, the American economy shows some signs of improvement.
Although this is a classic case of correlation-not-proving causation, there is a story to be told here. America is the largest consumer of Chinese goods – and it only makes sense that when Chinese products are increasingly exported to America, it reflects an increase in consumption. This increase can point to the fact that Americans are spending more money, or at least more prone to do so in an uncertain economic environment.
However, manufacturing also increased domestically as well. Yes, despite dismal figures in the auto industry, manufacturing within other markets appears to be on a (at least temporary) rise. The same article alludes to the fact that manufacturing has led the United States out of recessions in the past, and that it might be the case this time around. A weak case, considering America’s manufacturing base, but it’s certainly within the realm of possibilities.
If that is the case – if manufacturing really did increase domestically – that would be a good sign for job creation within the private sector. It would mean that with an increase in productivity, these manufacturing firms might be eager to begin hiring again. Not only that, but this trend would also be a signal that the average American consumer is willing to spend money again. Both of these turning points would have an effect on several other industries, such as the suppliers of the parts of manufacturers, and those who sell what firms produce.
For now, though, moderate growth in manufacturing is expected, at least for a while. Unless these new figures are being exaggerated, these might be the first signs of recovery we have been waiting for.
That’s my take on the situation. What’s yours?