Optimism Among US Manufacturers At Record High Heading Into 2019

by Joe Williams : American manufacturers think the future looks bright.

The GOP-led tax cuts and President Trump's deregulation efforts are driving record-high optimism in the industry heading into 2019, findings that come amid significant volatility on Wall Street as investors brace for a potential slowdown in the U.S. economy next year.

Nearly 89 percent of the 539 companies polled by the National Association of Manufacturers in the fourth quarter held a positive outlook for their business, bringing the yearly average to 92.4 percent, the highest in the survey’s 20-year history.

Just 18.5 percent of respondents cited an unfavorable business climate as a key concern, down from 71.2 percent in the final months of former President Barack Obama's tenure in 2016. In the next 12 months, companies expect capital investments to increase 2.6 percent, full-time employment to rise 2.2 percent, and wages to jump 2.3 percent.

Despite the rosy forecast, pitfalls still loom. Just over 68 percent of respondents listed attracting qualified workers as a top concern. Higher raw material cost, spurred by President Trump’s double-digit tariffs on steel and aluminum imports, was a secondary worry for 65 percent of manufacturers.

“This year was one for the record books, with manufacturers’ average optimism for 2018 hitting an all-time high,” NAM President Jay Timmons said in a statement. But over the next decade, "as many as 2.4 million could go unfilled if we don’t equip more Americans to take on these high-tech, high-paying careers.”

And while the economy remains strong, some experts forecast a slowdown in 2019 and investors remain skiddish over the future of ongoing trade negotiations between the U.S. and China. The decision by the Federal Reserve on Wednesday to raise interest rates also sent the top U.S. stock indexes tumbling to year lows.

Still, consumer sentiment remains high after the tax law cut rates for most Americans. It also lowered the corporate tax rate from 35 percent to 21 percent. While corporations directed savings to one-time employee bonuses and other workforce benefits, a sizable number used the influx for stock buybacks, prompting criticism from Democrats that the law predominantly benefited the rich.

Democratic leaders have pledged to try to roll back key provisions when they retake the U.S. House of Representatives next year. Top executives at some of the nation's largest businesses, however, have pushed back on that characterization and argued that the benefits of the law will be realized over several years.

The money sent back to investors "is a redeployment of capital to a better and higher use," Jamie Dimon, chief executive officer of JPMorgan Chase, said recently. "We have to educate the American public, particularly my Democrat friends, about how that's beneficial for all America."
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Joe Williams is a business reporter for the Washington Examiner. He previously reported on the Senate for Roll Call and healthcare for Congressional Quarterly and InsideHealthPolicy. Image added by editor.

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