I’ve been so preoccupied lately with reporting on the Federal Reserve’s manufacturing production figures each month that I’ve forgotten to point out a big data problem that they’ve been suffering for a long time, and that still distort output levels – to the upside.
The problem: the Fed figures, which are inflation-adjusted, overstate output in the information technology hardware (computers, semiconductors, telecoms equipment, and the like). And these high tech products for many years have accounted for all the real growth registered by U.S. manufacturing.
Just one figure is needed to show how important they are. Since the December, 2007 beginning of the last recession (which was a humdinger for manufacturing), overall after-inflation manufacturing production is up by 3.43 percent. But if you take away the high tech hardware sector, it’s down by 1.34 percent. And this means that all those manufacturing cheerleaders who keep claiming that the sector’s output…
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