Funny thing happening in this economic forecast

PREDICTIONS regarding long-term economic trends are about as reliable as a 10-day winter weather forecast in Oklahoma: It may snow. It may not. It may snow a lot. It may not.

In the 1950s, a geologist for Royal Dutch Shell predicted U.S. oil production would peak in the 1970s and the world would physically run out of oil. In 2018, the United States is poised to become the world’s top oil-producing nation (it’s been the top natural gas producer since 2009). Meantime, North American oil reserves appear bountiful.

Economic trends analyst Mark P. Mills recently noted another market prediction that could prove as flaky as the snow that may or may not fall in Oklahoma. The forecast Mills mentioned is that manufacturing employment will take the same track as farm work and become a negligible share of the U.S. workforce.

Seems logical. Manufacturing jobs have been moving out of the country for decades. Robots have replaced humans in factories, just as advances in agriculture technology reduced the need for workers.

But a funny thing is happening. Last year, U.S. manufacturing employment gained 196,000 jobs, the best showing since 2014. In December, 12.5 million Americans were engaged in manufacturing. Manufacturing is growing at a faster pace than the rest of the economy.

What’s most important about this trend is that manufacturing jobs pay, on average, more than $900 a week, compared with $757 for the private sector as a whole.

Mills cites Bureau of Labor Statistics showing that during the past 12 months, industrial-sector jobs (which includes mining and thus oil and gas extraction) grew at twice the rate of the health care sector. Meanwhile, IT, retail, leisure, transportation and government saw little net job creation.

What’s going on? Farm job declines are perhaps easier to understand; thus, long-term trend projections are easier to make. After all, food consumption can grow only by an amount related to population growth.

On the other hand, there’s no predictable limit to the demand for manufactured goods. Consumers the world over are hungry for products that are either new to the market or available to replace what they already have.

Of course, the United States will get only a piece of factory job growth. President Trump is determined to secure a larger piece, but his trade policy may hurt the effort. Why? The leading source of factory job growth is in the fabricated metals sub-sector and that sector is affected by the cost of steel, which in turn is affected by protective trade policy.

A sobering counterpoint to recent industrial-sector jobs growth is that the 12.5 million Americans working in factory jobs in December of 2017 compares with 13.7 million in December of 2007. Just six years earlier, the figure was 17 million.

Still, predictions of the near extinction of U.S. factory jobs have been greatly exaggerated. Mills, a senior fellow at the Manhattan Institute, says the argument that manufacturing employment will go the way of farm jobs is “wildly overstated.”

It’s safe to predict the absence of snow in Oklahoma in June. Economic trend predictions are nowhere near as reliable.