In what year did the United States produce its highest output of manufactured goods? When asked to

Question:

In what year did the United States produce its highest output of manufactured goods? When asked to a large group, the guesses range from the 1960s to the 1990s. The correct answer is usually "last year." Figure 13.2 illustrates this by plotting on the right scale the real value added in manufacturing, 1960-2008. Given that a recession began in 2008, there was a slight downturn since manufacturing is sensitive to the business cycle. As the graph shows, however, there is a long-run upward trend in manufacturing output that is interrupted briefly by the occasional recession. The left scale shows manufacturing employment. Employment peaked in 1979 at 19,426,000, and began a long-run decline after that. In 1980 the United States entered a mild recession, and then a more severe one in 1981-1982. Manufacturing employment recovered some of its losses in 1984, but continued its trend downward. Within the story of the growth of manufacturing output, there are a couple of other stories not directly shown in the graph. First, there is the story of manufacturing relocation within the United States. Traditional industrial states in the north central part of the United States, such as Ohio and Michigan, have seen many jobs leave for other parts of the country. Some jobs have gone overseas, but quite a few have also gone to southern states such as South Carolina, Tennessee, and Texas. When coupled with the overall

FIGURE 13.2 Real Value Added and Employment in Manufacturing, 1960–2008 25,000- 1800 1600 20,000 - 1400 1200 15,000 -

Decline in the total number of jobs, the plight of older manufacturing states has been grim. This has also contributed to the mistaken perception that the United States no longer has a vibrant manufacturing sector, but the story of Figure 13.2 is that the United States continues to produce a large and grow-ing quantity of manufactured goods. The second story is the rapid increase in productivity in the manufacturing sector. Fewer workers but more output means each worker is producing more, and output per hour worked in manufacturing has increased at a very rapid rate. This has occurred in part through the application of new technologies and new processes, and while productivity growth speeds up and slows down, it is usually much more rapid in manufacturing than in services or agriculture. Hence, even if we consume the same quantity of manufactured goods, we would expect a smaller share of the labor force to produce them for us.
Write a paper about the contribution of manufacturing sector in the economic growth of United States and all over the entire globe in response to the questions: Provide an overview of this case analysis; summarize the key points.
a. Using Figure 13.2, how does this data support the case analysis?
b. Estimate how these numbers will look over the next 10 years (2009-2018).