Industrial Production Gain Not as Good as it Looks

Today the Federal Reserve announced that manufacturing output rose 1.1% in July, led by an 9.9% gain in the output of motor vehicles and parts. Over the past year, the output of motor vehicles and parts rose by 32.6%.

But remember, this is an output gain, not a value-added gain. Output measures the number of motor vehicles and parts leaving domestic factories. But it doesn’t take into account any increase in offshoring–that is, use of imported parts.

It turns out that over the past year, imports of motor vehicle “parts, engines, bodies and chassis” rose by 79%. Yowza.

The implication is that there are a lot more imported parts and engines going into ‘American-built ‘ cars and trucks. So value-added in the domestic auto industry–which is what really matters–went up less, maybe a lot less, than 32.6%.

Disclaimer: This page contains affiliate links. If you choose to make a purchase after clicking a link, we may receive a commission at no additional cost to you. Thank you for your support!

About Michael Mandel 126 Articles

Michael Mandel was BusinessWeek's chief economist from 1989-2009, where he helped direct the magazine's coverage of the domestic and global economies.

Since joining BusinessWeek in 1989, he has received multiple awards for his work, including being honored as one of the 100 top U.S. business journalists of the 20th century for his coverage of the New Economy. In 2006 Mandel was named "Best Economic Journalist" by the World Leadership Forum.

Mandel is the author of several books, including Rational Exuberance, The Coming Internet Depression, and The High Risk Society.

Mandel holds a Ph.D. in economics from Harvard University.

Visit: Innovation and Growth

1 Comment on Industrial Production Gain Not as Good as it Looks

  1. auto sales are getting ready to crash and burn. dealership got good traffic,but no one's buying, need cash for clunkers 2 or the car makers won't survive the year

Leave a Reply

Your email address will not be published.


This site uses Akismet to reduce spam. Learn how your comment data is processed.