Very recently, the press and social networks showed a high sensitivity to the dissemination of information related to data that indicate a possible contraction of manufacturing activity in the United States, in what some argue would be a sign that the country is moving Towards a recession.
All specialists, investors, politicians and the public in general focus their attention on the facts related to the North American and Chinese economies for a fundamental reason: being the largest economies on the planet, they exert a very strong indirect influence on the rest of The national economies of the world. In the same way, for cultural reasons, mostly Americans, educated or not, devote special interest to the macro-economy issues of their country and participate, in one way or another, in the political discussions related to it. This attitude contrasts with the extraordinary passivity with which the rest of the world assumes the political acts of its representatives or of those who hold power. Passivity and stoicism that breaks from time to time and explodes to become a cycle of uncontrollable violence.
However, macro-economics is a subject of specialists, who need to possess a certain level of scientific background to be able to address, understand and explain the behavior of economic, political and social phenomena that are of some complexity. If such levels of difficulty can lead specialists to make mistakes, we cannot expect the general public to succeed in all their interpretations or views.
The content of the data to which I refer feed a periodic report that publishes the ISM with some frequency and reflects the behavior of the US manufacturing and non-manufacturing product corresponding to the months immediately prior to the publication of said report.
Although capitalist economies are based, among other things, on the principle of freedom of enterprise and the right to make the best decision that favors our interests as economic agents, we see that economic activity is not carried out in a manner unordered but presents regulatory elements whose operation depends on a system of signals and alerts that indicate the moment in which a specific action must be taken. Just as the pilot of an aircraft constantly monitors its navigation instruments and maintains permanent contact with its control tower to carry out the appropriate and precise actions that allow the trip to be executed smoothly; in the same way, the political systems of the different countries execute the necessary acts to reach high rates of economic growth and, in this way, fulfill the first necessary condition so that the citizens who live there aspire to enjoy a standard of living highest.
So that economic activity is under constant scrutiny and scrutiny through a set of statistics and indicators of various kinds in order to allow us to form an idea about what is happening with the fundamental economic trends so that they are then activated political or governmental mechanisms, if necessary.
For management, logistics and review reasons; Statistics that measure the level of the national product, either general or by economic sector, are issued several months after the period they are evaluating. In the case of the United States, this delay is within a period of approximately 6 months; while in other countries this period of time can reach up to 24 months. As we can see, such prolonged periods of time between the date of issuance of the statistics and the period under evaluation prevent the necessary information from being taken to make the appropriate decisions regarding economic policy or act urgently before the appearance of emergencies in the macro-economy plane.
In this sense, each nation has a set of statistical systems that show the behavior of the real sector of the economy immediately after the end of the period under study. In the United States, we can point out the ISM report as one of several examples; while in other countries figures such as the consumption of electricity are often used. In any case, the main objective is to have quick information that provides clues about the behavior of the national product. However, to have instant information you have to sacrifice other elements, such as accuracy.
The ISM report is a report that condenses unweighted qualitative data, which means that the figures she throws may present a much higher margin of error than that usually used by specialists in their research. These levels of error are not the result of the lack of competence and professionalism of those involved in the task of constructing this report, but rather the sacrifice that is made in order to have some information in the instant immediately after the end of the period under study.
Obviously, the data corresponding to the national product come largely from the accounting systems, statistical systems, management systems and control systems used by private and public companies that are considered representative of the national economy and, therefore, enter in the sample that will be used to calculate the official statistics of the nation. However, these companies, despite having data processing systems of high complexity, high speed and high cost, do not have a definitive figure of any item at the end of the current period. Without this information it is impossible to build a system of indicators that illustrates, quickly, about the trends that are materializing in the national economy. Despite this, we know that the senior officials of these companies, who are considered representative of the economy, because they handle information related to the activity of the company in which they work, can provide data and clarify their nature. qualitative, which are likely to be processed schematically, to result in the report we are referring to.
It is evident that the margin of error associated with the information obtained in an interview or through the emptying of surveys, which do not imply commitment or responsibility, is much greater than the data coming from the financial statements of these companies, these being endorsed by signatures of public accountants, consulting firms, auditing firms and support of the corresponding supervisory public body. Here is the reason why we should be aware of the margin of error implied in reports of this type. If these possibilities of inaccuracy exist in these reports of rapid emission, we must not hurry to affirm that the North American economy is heading towards the disaster. On the other hand, we see that the aforementioned report, although it indicates a contraction in the manufacturing product, we see that it also indicates that the non-manufacturing product maintains a growing trend, which minimizes the possibility that the US economy is entering a recession stage But then, how can we interpret the content of the ISM report ?
First of all, we have to be clear that the US economy is going through a period of radical transformation in its structure during the last thirty years due to the rise of the telecommunications sector, the digital economy and the overvaluation of the dollar . To illustrate this phenomenon, we must take into account that fifty years ago the presence of the manufacturing sector in the stock market activity was evident. Then we must evaluate the representative value of the sample used to produce this report since a sample of companies representing the manufacturing sector designed five or ten years ago may not be reflecting the reality that prevails today. An economy in constant transformation, as is the US economy, must constantly make the necessary adjustments to its statistical systems and indicators, otherwise, we could be observing things that do not exist.
My personal opinion is that the North American manufacturing sector has been growing for many years by a magnitude less than proportional to the growth of the national product, which means that, in relative terms, this sector is less and less important. In the same way, I suspect that within the manufacturing sector there has been a process of closing companies and shrinking existing companies that fails to counteract the expansive effect generated by another group of companies in the sector that take advantage of their comparative advantages for such purposes. This is how the consequences on employment in the sector can be devastating since on the one hand a long process of job loss would be occurring as a result of the disappearance and operational shrinkage of existing companies that is not compensated by the productive expansion of the winning manufacturing companies for reasons of automation, robotization and the handling of very high technology elements.
The decision that Americans must make is that they should apply incentives to manufacturing activity or allow the US economy to adopt the structure imposed by the circumstances. In this sense, the commercial war represents an incentive for the manufacturing sector because this commercial policy would allow US products to recover the space that, at the moment, is being occupied by foreign products.
To get an idea of the magnitude of the growth of the North American economy in the last decades, let's see that, the colossal North American trade deficit coincides with a slow growth of the North American manufacturing product. That is to say, there was not a displacement of North American products by foreign products, but the markets offered increasing quantity of both products.
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| United States GDP From Manufacturing |
Despite the recent social problems, it is clear that the United States is the largest, strongest and most stable economy in the world. So far there are no reasons to think that economic events linked to a recession may occur in the coming months.
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