By truly understanding manufacturing, we can rebuild the factory sector’s standing among educators, parents, and policymakers. We can support better job opportunities and consistent economic growth for future generations. Read on for a nonpartisan, rhetoric-free understanding of manufacturing in America.

In recent months, there have been a number of welcome signs of stability in the global economic picture. A firming of price pressures and trade flows in key regions has eased fears of a lapse into growth-destroying deflation. This is a moderate improvement from our December 2016 forecast.

Our current five-year forecast is one of persistently sluggish activity. We expect no more than 2% annual growth in U.S. GDP through and including 2020. We predict less than 1% annual growth in U.S. manufacturing output for 2016 and 2017 and then growth of 1% or a little more through and including 2020.

While the third quarter is off to a good start, declining production in the first half means that manufacturing production will grow only 0.2% this year as a whole. Communications equipment, medical equipment and supplies, and private nonresidential construction have led growth this year. The manufacturing sector’s production should speed up to a modest pace of growth in 2017 (1.6%) and 2018 (2.5%). Consumer-driven manufacturing markets will continue to support the sector but it is a modest rebound in investment- and material-driven manufacturing that will allow an acceleration. A key driver, mining and drilling exploration, is finally bottoming out and should return to growth in 2018.

Manufactured goods are ubiquitous at home, in transit, and at work, but the narrow definition of manufacturing industries in national statistics implies that the sector is of only minor importance to economic activity. The traditional finding is that manufacturers’ proportion of gross domestic product (GDP) is only about 11% and manufacturing’s share of economy-wide full-time equivalent employment is just 9%. Since this excludes manufacturing activities such as research and development, corporate management, logistics operations, and advertising and branding, those figures are merely the tip of the iceberg.

This is my final MAPI Foundation report, on U.S. and Chinese trade in manufactures during the first half of 2016, as I am retiring from MAPI at the end of August. The report also provides a breakout of U.S. bilateral trade with China and Mexico, which has become a contentious electoral issue.

In the case of new technology investment, the cost side of the return-on-investment equation contains a larger and broader set of factors than is the case with a fixed technology frontier, under which all technologies are known as previously employed capital. But the benefits of a new technology investment are potentially as broad as the costs. In essence, the diffusion implications of the cost–benefit balance for new technology investment depend on corporate decision-maker flexibility regarding the payback period of the investment and an adjustment to the propensity to take a wait-and-see posture toward purchase and implementation.

We are lowering the forecast for this year because of the persistence of the shocks to manufacturing demand, lack of progress in cutting excessive inventories, and the downward revision by the Federal Reserve of reported growth over the previous three years. Manufacturing production increased 0.8% last year and we forecast only 0.4% growth in 2016. We do, however, expect 2.5% growth in 2017 and a 2.8% increase in 2018.

Amid all of the recent public dialogue about new manufacturing technologies and manufacturing automation investment in particular, there are little or no data offering a coherent picture of the automation investment dynamic. In this second of three MAPI Foundation papers on manufacturing productivity performance, Cliff Waldman seeks to remedy the data deficit by presenting the results of a national survey of U.S. manufacturers on their automation activity. He offers revealing stratifications of the results by company size and industry.

Chief Economist Dan Meckstroth discusses the overall outlook for the U.S. economy, with particular emphasis on the manufacturing sector, for 2016 and 2017.