What Specific Economic Changes have Scoured the United States?: Manufacturing

Changes in manufacturing and trade maintains a steady position as one of the most important economic consequence of COVID-19. Manufacturing companies were hit due to lockdown measures, and some were made to shut down momentarily. Other companies forced limitations on the products they could access. Immediate results included a decline of U.S factories present in Europe and Asia. In fact, manufacturing outputs were recorded to have a 43% drop annually, and service duration fell by 38%. 

One of the prominent manufacturing sectors that reaped the outcome was the motor vehicle and parts industry, otherwise known as the “industry of industries.” In the first quarter of 2020, their output was held to be at 95.685. One quarter of a year later, that value decreased to 50.909, listed as the lowest output index regarding manufacturing industries. Additionally, prior to the pandemic, the inventories and manufacturing of cars met the requirement of 2 months for cars. Evidently, this was not the case during COVD, as the record low was nearly met at only 1 month for cars. The issue doesn’t end there. The U.S is involved in heavy trade of machinery with Canada and Mexico, among other countries. In 2020, it was reported that the U.S domestic exports of transportation equipment significantly decreased by 28.3%. All these transformations struck the 12.8 million manufacturing employees, damaging the manufacturing workforce that accounts for 11.39% of the total output into the economy. 

Apart from the motor vehicle and parts industry, small businesses were heavily affected as well. In the U.S, there are around 33.2 million small business. This serves as an industry itself, providing jobs for 62 million Americans and creating opportunities for 20 million individuals. As one can imagine, when COVID launched its wrath on the US, lockdowns, reductions in demand, and public health concerns came with it. Naturally, small businesses temporarily closed, amounting up to 43%. Employment dwindled down by 39%, and around the Mid-Atlantic Region, in areas such as New York City, employment rates subsided by 47%. The sectors regarding small businesses are extremely diverse, including construction, hospitality/recreation, finance/real estate, and agriculture and mining. The sector of hospitality & recreation had an employment of around 10.1 million workers, and nearly 86% of them were laid off. 77% of the firms in this sector anticipated laying off workers, and 4 million got laid off immediately. 

The same hardship applied to the works of other sectors, thought not as harshly. Transportation & Warehousing sectors employed around 1 million people, with 71.5% of firms anticipating layoff and 18% already laid off. The immense quantity of jobs loss during COVID from small business such as these accounts for a 26.3% drop of U.S GDP. The literal translation equals to a loss of $14.2 trillion dollars at the end of 2022, and a total of $14 trillion dollars lost when 2023 ended. 

References: 

Naseer S, Khalid S, Parveen S, Abbass K, Song H, Achim MV. COVID-19 outbreak: Impact on global economy. Frontiers in Public Health [Internet]. 2023 Jan 30;10(1009393). Available from: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9923118/

U.S. manufacturing output, hours worked, and productivity recover from COVID-19 : The Economics Daily: U.S. Bureau of Labor Statistics [Internet]. www.bls.gov. 2022. Available from: https://www.bls.gov/opub/ted/2022/u-s-manufacturing-output-hours-worked-and-productivity-recover-from-covid-19.htm#:~:text=After%20the%20COVID%2D19%20pandemic 

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‌2019 United States Manufacturing Facts [Internet]. NAM. Available from: https://nam.org/state-manufacturing-data/2019-united-states-manufacturing-facts/ 

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Bartik AW, Bertrand M, Cullen Z, Glaeser EL, Luca M, Stanton C. The Impact of COVID-19 on Small Business Outcomes and Expectations. Proceedings of the National Academy of Sciences [Internet]. 2020 Jul 10;117(30). Available from: https://www.pnas.org/doi/full/10.1073/pnas.2006991117