Sept. 16, 2014 SIGN IN | REGISTER
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Manufacturing's Comeback: Numbers Fabricate a Complicated-Yet-Rosy Outlook

Mira Oberman/Getty Images File Photo
According to many economists, unreliable government data is leading to overly rosy conclusions about the health of the manufacturing industry.

Today, consumers can buy much more computing power with their dollars than they could a few years ago. Government statisticians record that as an increase in the overall value that the computing industry adds to the economy. That’s why the computer and electronics industry’s contribution to overall economic growth surged more than sevenfold between 1997 and 2012, according to BEA data.

Remove the computer and electronics industry from the manufacturing equations, and you see the sector in a very different light. In fact, as Houseman noted, without computers and electronics, manufacturing has significantly underperformed the economy as a whole.

“It’s this big outlier that just jerks the numbers, and people should understand that,” Houseman said. “Everybody who talks about manufacturing policy should understand what the numbers are really saying.”

The complications and disputes over manufacturing data likely will only increase in the next few years, as statistical agencies move to a new way of counting manufacturing jobs at so-called factoryless goods producers.

Under the new measure, companies that keep some white-collar jobs in the United States but assemble their products in factories abroad could be counted as manufacturers.

That means that a designer at Apple could be counted as a manufacturing employee as long as Apple maintains ownership of its products when they’re shipped from a Chinese factory to the United States. That could produce a surge in the number of manufacturing jobs when the reclassification takes place in 2017.

“The whole definition of manufacturing is changing at this point,” Mandel said.

Government statisticians have been grappling with problems in the data for years. But better data collection is not cheap. And Congress is not likely to spend money on technical fixes in this era of austerity.

As a result, the country is likely to muddle along with misleading or inaccurate data. More troubling, Washington will continue to make policy without knowing what exactly it is up against.

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