In a recent column for the Cato Institute, economist Scott Lincicome makes the argument that U.S. manufacturing ended 2025 with a “thud.” While his analysis may seem convincing on the surface, it is important to dig deeper and understand the flaws in his reasoning. Lincicome’s fundamental error lies in treating employment as the sole indicator of a strong manufacturing sector in a labor-constrained economy. In reality, the resurgence of U.S. manufacturing under the Trump administration has been characterized by rising productivity, output, and wages – all of which are positive signs for the health of the industry.
Let’s start with productivity – an essential measure of efficiency and competitiveness in the manufacturing sector. According to data from the Bureau of Labor Statistics, U.S. manufacturing productivity has been on the rise since 2016, with an average annual growth rate of 2.3%. This is a significant improvement from the previous decade, where productivity growth had stagnated at an average of 0.4%. The strong performance of U.S. manufacturing in terms of productivity is a testament to the sector’s ability to innovate and adapt to changing market conditions.
But it’s not just productivity that is on the rise – U.S. manufacturing output has also been steadily increasing. In fact, the latest data from the Federal Reserve shows that U.S. manufacturing output reached an all-time high in 2025. This is a remarkable achievement considering the challenges faced by the sector in recent years, including increased competition from overseas and the effects of the COVID-19 pandemic. The fact that U.S. manufacturing has been able to not only survive but thrive in this environment is a testament to the resilience and strength of the industry.
And let’s not forget about wages – a crucial factor in determining the well-being of workers in the manufacturing sector. Despite claims that U.S. manufacturing jobs are low-paying and offer little opportunity for growth, the reality is quite the opposite. According to the National Association of Manufacturers, the average hourly wage for a manufacturing worker in the U.S. is $28.47, significantly higher than the average hourly wage across all industries. In addition, the industry has been actively investing in workforce development programs to upskill and train workers, providing them with the opportunity for higher-paying and more fulfilling careers.
So why does Lincicome’s analysis paint such a grim picture of U.S. manufacturing? The answer lies in his narrow focus on employment as the sole indicator of success in the sector. While it is true that manufacturing employment has not fully recovered to pre-recession levels, this is not necessarily a sign of weakness. In fact, it is largely a result of the industry’s embrace of automation and technology, which has increased efficiency and reduced the need for manual labor. This trend is not unique to the U.S. – manufacturing employment has been declining across the developed world, regardless of trade policies or economic conditions.
In conclusion, it is clear that U.S. manufacturing has not “ended 2025 with a thud” as Lincicome suggests. On the contrary, the sector has shown remarkable resilience and growth under the Trump administration. Rising productivity, output, and wages are all positive indicators of a strong and competitive manufacturing industry. While there are still challenges to be addressed, such as the skills gap and global competition, the future of U.S. manufacturing looks bright and promising. As long as we continue to support and invest in this vital sector, we can look forward to a prosperous and robust manufacturing industry in the years to come.
