No, American Manufacturing Hasn’t Been Revived

The manufacturing industry is vital to the United States' long-term growth and competitiveness against China because it fuels innovation, strengthens economic resilience, and underpins the defense industrial base.

Unfortunately, many pundits and Washington insiders claim that the U.S. manufacturing industry is growing. Former Energy Secretary Jennifer Granholm recently wrote on X, “Make no mistake—@POTUS’ industrial strategy has revived American manufacturing, created jobs, and made our country more secure.” Meanwhile, the Department of Commerce boasts that “over 700,000 new manufacturing jobs have been created and over $910 billion in private manufacturing investments have been announced nationwide. As manufacturing has soared, so too has the opportunity for workers of all backgrounds.”

However, the reality is that the U.S. manufacturing sector is shrinking as a share of the national economy. According to value-added data from the Bureau of Economic Analysis, the manufacturing sector is not growing as fast as gross domestic product (GDP).

From 2012 to 2024, GDP grew by 34 percent, while the manufacturing sector grew by only 21 percent. (See figure 1.) Indeed, in 2012, manufacturing contributed 11.3 percent of GDP; by 2024, its share had fallen to just 10.2 percent.

Figure 1: U.S. manufacturing sector and gross domestic product growth rate from 2012 to 2024

Upon closer examination of the 19 industries that comprise the manufacturing sector, 14 grew more slowly than the GDP growth rate, contributing to the sector’s relative decline. From 2012 to 2024, these 14 industries posted growth rates ranging from -21.9 percent to 26.4 percent, all falling well below the 33.6 percent increase in GDP over the same period. For example, the advanced industry electrical equipment, appliances, and components category declined by 6.3 percent, nearly 40 percentage points below the GDP growth rate. (See figure 2.)

Figure 2: U.S. manufacturing industries and gross domestic product growth rate from 2012 to 2024

As a result, these 14 manufacturing industries’ shares of GDP also declined during this period. Machinery saw the largest drop, falling 0.4 percentage points—from 1.0 percent of GDP in 2012 to 0.6 percent in 2024. Similarly, electrical equipment, appliances, and components declined by 0.09 percentage points, contributing just 0.2 percent of GDP in 2024 compared to 0.3 percent in 2012. The other transportation equipment industry also shrank from 0.8 percent to 0.7 percent of GDP. Finally, the fabricated metal products industry's growth rate declined from 0.8 percent to 0.5 percent during this period. (See figure 3.) Although other manufacturing sectors also contracted, the decline of these four industries is particularly concerning, given their importance to U.S. competitiveness in the face of Chinese industrial strength.

Figure 3: Manufacturing industries' share of GDP in 2012 and 2024

By contrast, five manufacturing industries are gaining ground. From 2012 to 2024, they grew between 40 percent and 84 percent, outpacing the GDP growth rate of 33.6 percent. For example, the advanced industry of computers and electronic products increased its share of GDP from 1.18 percent in 2012 to 1.25 percent in 2024. The other two advanced sectors—chemical products and motor vehicles, bodies and trailers, and parts—grew by 0.10 and 0.17 percentage points, respectively. (See figure 4.)

Figure 4: Growing U.S. manufacturing industries share of GDP in 2012 and 2024

These trends are unsustainable if the United States wants to avoid becoming fully dependent on China for its manufacturing needs. As ITIF’s Hamilton Index shows, China is already dominating many of these advanced industries. In fact, the report finds that China was the leading producer in seven out of ten advanced industries as of 2020. This is alarming, given the strategic importance of these dual-use sectors to the United States’ national security and long-term economic competitiveness.