Building the future
|Summary
There is a construction boom underway that is quietly transforming the production capabilities and other aspects of the U.S. economy. The fastest growing category within nonresidential construction in recent years has been manufacturing (Figure 1), specifically high-tech manufacturing. The crews that are putting up these cutting-edge facilities are building more than cleanrooms, they are changing the shape of manufacturing output and shortening far-flung global supply chains for U.S. producers. We need not wait to see it in the data. The high-tech manufacturing sector in the United States is already producing half-again as much as it was in 2017, but the roughly tenfold increase in the building of high-tech factories suggests the 50% increase could be just a down payment.
Our initial assessment is that this is not a manufacturing renaissance in the sense that it will lead to massive hiring in the manufacturing sector. In other words, we do not anticipate a major onshoring of jobs, but we do expect to see the onshoring of technical capabilities. That, in turn, has the potential to contribute to a rise in productivity which may offset structural labor force challenges stemming from an aging demographic. There is no shortage of things to worry about in terms of negative risks to our economic outlook. When we look for potential upside risks, however, the high-tech building boom is emerging as a key bright spot.
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