Earlier this week, when I testified before Congress’ Joint Economic Committee on behalf of the National Association of Manufacturers (NAM), I told lawmakers that manufacturers were in total agreement with President Trump last fall when he told NAM members that passing tax reform would be like adding “rocket fuel” to our economy.
Proof in point, the latest NAM Manufacturers’ Outlook Survey highlighted Thursday by President Trump at a Rose Garden event, shows 93.5 percent of manufacturers registered a positive outlook for their company — the second highest level ever recorded after last quarter — and optimism among small manufacturers actually hit an all-time high of 94.5 percent.
{mosads}What’s more, manufacturers’ projections for employment growth, capital spending and inventories also registered all-time highs. Projections for wage growth are at a 17-year high.
We see stories nearly every day of how manufacturers and other businesses are creating more well-paying jobs, putting more money in workers’ pockets and investing more in their own businesses as well as the economy more broadly.
I shared a few examples in my hearing, like the NAM-member manufacturers that are doing things like giving all employees a pay raise (Miles Fiberglass in Oregon), doubling the size of their workforce (Centennial Bolt in Colorado) or embarking upon a $1 million facility expansion (Windham Millwork in Maine) — all thanks to tax reform.
I urge you to check out many other stories like these on the NAM’s blog, Shopfloor.org, where we will continue to post more in the coming weeks.
It’s clear that much of this optimism is due to the fact that tax reform — even, as last quarter’s survey showed, simply the anticipation of its passage is energizing manufacturers in a way that we have not seen in a long time. It makes perfect sense too when you consider how tax reform achieved so many of manufacturers’ long-sought goals.
It reduced the burden on small and medium-sized companies, which represent more than 90 percent of NAM members. It also moved us toward a territorial tax system like the rest of the world while simultaneously making it easier for manufacturers to expand fixed investments, invest more in research and development and bring more dollars earned overseas back home to the United States.
Of course, there are additional tax reforms that could have supported manufacturing even further, and certainly other factors like regulatory reform are driving this optimism as well. But the main point is that Washington delivered in a big way with pro-growth tax reform, and because it did, the private sector is now starting to deliver too.
The NAM is also in the process of surveying its membership on the impacts of tax reform, and we will release those findings of that analysis in the coming days too.
For now, though, my prediction as an economist is that tax reform should lead to manufacturing investments rising by $55 billion in 2018 — an increase of 11 percent compared to last year.
I also believe tax reform should lead to manufacturing employment rising by more than 100,000 workers in 2018 — a substantial increase, especially considering that the sector added 207,000 workers in 2017, a banner year, and has already added 73,000 so far this year. These predictions are based on a model I have been developing to predict the impacts of tax reform.
It’s fair to say that I am optimistic about the prospects for American manufacturing in 2018. Indeed, as the Manufacturers’ Outlook Survey underlines, so are manufacturers.
As NAM President and CEO Jay Timmons put it, manufacturers “are investing in our people through new jobs, higher wages, bonuses and growing our operations right here in the United States” because they’ve been “empowered by tax reform and regulatory relief.”
In other words, manufacturers are proving that when the president and lawmakers deliver on policy, manufacturers will deliver for the American people. That’s why Jay has urged policymakers to keep up the pace:
“To keep this momentum going, to take us to the next level, manufacturers now want to see action on infrastructure, further regulatory relief and more opportunities to sell our products overseas.”
I couldn’t agree more, and I can’t wait to see what the future has in store for manufacturing in America.
Chad Moutray, Ph.D., is the chief economist for the National Association of Manufacturers.