A few minutes ago I ran across a chart showing that investment in factories had exploded recently and was twice as high as it had ever been in history. It was adjusted for inflation, which is great, but for something that big it struck me that it really ought to be shown as a percent of GDP. So I did:
By a funny coincidence, it turns out that in the second quarter of 2024 we did indeed set an all-time record: 0.854% of GDP compared to the previous peak of 0.847% in 1979.
Putting this into perspective, after falling during Donald Trump's term the rate of factory building has increased 2.5x since Joe Biden took office:
In dollar terms, we're currently spending $244 billion per year on factories compared to $91 billion three years ago. If you believe in restoring America's manufacturing capability, the past three years have been a golden era.
I'm not sure these factories weren't greenlit during DJT's tariff frenzy.
What else was powerful enough to encourage so much reshoring?
The graph represents investment, not completion. I really can't see a reason for a 4-year lag between "greenlit" and expenditure.
Supply chain issues in general, and for chips especially, during COVID.
Like with infrastructure Trump talked about bringing manufacturing back but didn’t do shit about it
thank you, senor ho, for your skepticism.
History began in 1960?
Modern records, at any rate.
Kevin, please go to work for the Harris campaign.
we don't need a reagan democrat fucking shit up.
anyway, kevin seems he'd be more at home with the teamsters chief.
Yeah, sure, but I bet they’re woke factories.
Ha!
... we could build a factory
and make wokery
frustrated, inc...
(points to dave pirner for not joining so many of his gen x brethren in going maga. definitely would have rated him as more susceptible to trumpism than the bassist from nirvana.)
"More bad news for Joe Biden"
Do you know if data centers and/or distribution centers are included in this figure?
They are and this is 100% the cause. LLMs took off in 2022 to 2024.
"The boom in data center construction, according to McKinsey, is expected to be 10% through 2030. Some experts predict even higher growth – 20% annually for the data center hyperscale market"
Thanks.
That makes the spike less impressive, though.
I'm sure the electricians wiring the data centers feel bad about that, too.
Good for the electricians. But data centers and distribution warehouses don't translate to value-added manufacturing jobs, which is what I thought we wanted to boast about.
This is not true, like, at all.
Data center production went up in 2020 due to all the demand of online everything.
This is buying robots for chip factories and battery factories etc.
And like everything else Joe Biden has accomplished it will be after he leaves office that people start to notice and appreciate it.
It would just suck if fatass were in the WH claiming credit for it.
Maybe he'll get Srho to publicly give him credit for it
Not trying to give that guy credit. Just like KD always adjusts for inflation, I consider lag between causes and effects. Investment decisions can take years, sometimes longer than a presidential term.
but come January 21, 2025, if trump is president, you will absolutely being touting the economy that day as the best ever, thanks to mr. trump. & you'll have tears in your eyes.
Can't help but notice two points when things dramatically changed. The big drop during Reagan's time seems fairly permanent. I remember Krugman has talked a number of times about lots of factory closures during Reagan. It is especially interesting that the drop occurred AFTER the economy had recovered from the massive recession.
The other is the big drop at the start of Dubya's term. I assume it is related to China and there is at least a partial recovery at the end of Obama's term. I can see why the working class love Republicans.
As for some of the other comments, I tend to think this is because of things Biden did plus the current situation in general. I don't think this has much to do with Trump putting some tariffs on things. First off because his policies were so chaotic that it was almost impossible to figure out what companies should do. Trump's crony capitalist ideas sucked - just think about setting up a factory in a third world country where you have to keep bribing different people and never know what bribe you'll need next year. Second, because a lot of US manufacturing involves low price (and low profit) parts from other countries, Trump's tariffs could easily make it more expensive to build in America, not less. I suppose I could add that putting tariffs on items from Europe and other allies seemed kind of dumb.
I do think that the supply disruptions during COVID made a lot of companies think about building factories here. Even so, I think Biden getting those 2 (or was it 3) gigantic bills passed really inspired/accelerated a lot of the current building. Certainly the amount of building took a big jump after the bills passed.
If you think that most of the current building is from data centers, I'd like to see what percentage it is of the current building. Maybe it is a high percentage of current spending, but I doubt it.
Do we have details?
eg are these essentially all Fabs (astonishing amounts of money poured into just a few buildings)?
Or Many buildings, but filled with robots?
Point is there are many possible implications to "we are building many more factories" and this summary statistic does not tell us which ones are correct - ie implications for labor, for new energy, for variety of products that don't need to be imported, etc