The “Made in America” Comeback

It’s the same old song…

“They took our jobs.”

“They can do it cheaper.”

“Trump’s tariffs won’t even make a difference.”

Every one of these tired refrains is now provably false.

With the latest data, we’re beginning to see a phenomenon that most pundits never would’ve expected — an across-the-board resurgence for American manufacturing.

That’s right folks. Made in America is back.

Click the video below for the full story:

Video transcript:

Hello, fellow Moneyball economists. I’m Andrew Zatlin, and this is Moneyball Economics.

Starting back in November/December last year, I was predicting that 2026 would be a year of robust economic growth, but we would have to wait until March and April to see the proof of that.

Now, the reason for March and April was because unfortunately, economic data’s always delayed.

And so in order for us to see this new year and see signs of growth starting January and February, well, you got to wait for that data to come out because it’s a little bit laggy. And that meant March and April. And that’s where we are. And that’s what the data’s telling us.

We are in position for a lot of growth this year. Why, back in November and December, was I reading the tea leaves and seeing this growth? That’s where we want to focus today. It comes down to two things, the consumer and America’s manufacturing base.

Now, the consumer is the biggest part of the story, right? They drive 70% of the economy and the consumer has just been steadily plugging along. Doesn’t matter what’s going on, tariffs, government shutdown. The consumer continues to spend their wages and wage growth has been pretty solid at about 4% plus. So all that money’s coming into the economy and it’s growing.

At the same time, it’s the manufacturing sector where I want to focus today because that’s where we’re seeing even more signs of life.

Now, the manufacturing sector in general in America is kind of the tail of the economic dog and it’s the head of the economic dog. It’s the tail because let’s face it, consumer spending means consumers are buying stuff. And that means factories are making stuff.

And so if you look at what’s going on in the manufacturing sector, it’s reflecting what’s going on in the consumer economy, and therefore what’s going to happen in the US economy in general.

Now, at the same time, America’s a big badass manufacturing country. We export a lot. And so this is when it acts like the head of the economy. When manufacturing is robust and strong and growing, it’s creating a lot of jobs and contributing to the economy a lot.

Well, back in November, December, my reading of the tea leaves for the manufacturing sector said they had pulled back too far. They’d gotten too lean. And so I started to point this out in the summertime.

The play was like this…

After COVID, we had a slowing down. We’re still growing, but a slower level of growth post- COVID in the manufacturing sector. In addition to which it wasn’t just COVID, we had the China factor. China’s been eating our manufacturing for far too long.

Well, last year was really the bottom for all of this. And the tariffs that Trump imposed really accelerated this process of manufacturing leaning up.

The tariffs forced companies to rush out. They stockpiled. They got a lot of goods, put it on the shelves to last a few months. And then folks further down in the supply chain and demand, they started to reduce how many months of inventory they needed.

So all in all, everybody got lean. They stopped buying inventory. They stopped buying equipment.

Well, folks, equipment breaks down. And so last year I started to point out that companies were not buying machinery. They were not replacing broken equipment and they needed to. They were holding back a lot because of the tariffs.

But I was seeing that once we got to the one-year anniversary of the tariffs, not even, companies had to start ramping up their inventory. Now, whether that ramp had legs or not, didn’t matter. I was seeing that by the first quarter, companies had to replenish stock. They just did.

And that that would create its own little positive feedback loop where demand would create demand and so on and so forth. That is exactly where we got. As of January, there are signs now that companies are too lean. New orders have surged. Employment is growing. The manufacturing sector is coming back to life. Now there’s one key slice of data that I want to highlight when I talk about this.

It’s manufacturing capacity utilization.

Factories can make a thousand widgets, but demand isn’t always for a thousand. Maybe the run rate demand is closer to seven or 800 widgets per month. And so that delta between what they can produce, the capacity and what they actually are using, the utilization is where we want to focus. If demand is surging, and in a given point in time, a narrow window say of a month, that capacity isn’t going to grow.

And so if demand is surging, the utilization goes up. As it turns out, if you take a monthly snapshot of manufacturing capacity utilization and you look at it historically on a year-over-year basis, it leads economic growth. And that’s what I mean by manufacturing’s both the tail and the head of the economic dog.

Manufacturing tells us what’s going on in the broader economy, and it tells us a couple of months in advance. It predicts recessions with a 100% perfection rate. And indeed, it’s not just predicting recessions, it predicts broader economic slowdown.

Coming out of COVID, obviously COVID was this crazy high growth period. Coming out of COVID, things were bound to slow down. But when we got to last year, they were in a tailspin. Starting with 2022, June, the manufacturing capacity utilization signal went negative, meaning year over year, growth was slowing down. And so starting in 2022 and running for 37 months, every month, month in, month out, utilization was growing.

Basically, manufacturer … I’m sorry, utilization was shrinking. Manufacturers were facing less and less demand and their factories were more and more idle. 36 out of 37 consecutive months until mid last year. We get to July last year and all of a sudden things are stabilizing. Now that’s key because remember, things are stabilizing. At the same time, we’re getting hit by the tariffs.

That means had we not had the tariffs, things might’ve been a little bit higher, a little bit sooner. Doesn’t matter. Every month for nine months almost, we have seen year over year growth in manufacturing capacity utilization.

Factories are using a little bit more of their factories month in, month out for the past nine months. Now, that’s not the case for March, the most recent month, but March got hit with the Iran oil shop, which kind of destabilized a little bit of the supply chain.

But the key point here is we’ve bottomed in the manufacturing sector and we have been going up.

This isn’t like a month or two. We have been steadily and slowly starting to grow again in the manufacturing sector. It has legs. If it continues, the impact on this economy will be significant. It could show up in the form of inflation, because let’s face it, if demand is up and supplies are restricted, that’s inflationary.

But you know what? We don’t care. A little bit of inflation is great if economic growth is even greater. And that’s what I see. I believe that consensus does not grasp the degree to which this economy is going to be surging in the second half, especially when we come back in May and Trump and Xi reached a decision on trade deals that will again add to all of this preexisting growth that’s underway.

The economy’s growing, the stock market’s going to grow.

Like I said, over the past month, you were handed an amazing buy the dip opportunity, but it isn’t over. The dip is over. Now we get into the Trump cycle and all this amazing growth. There’s plenty of time to take advantage of it.

We are in it to win it, folks. As you can tell, I’m pretty pumped.

Zatlin out!