“America is undergoing a factory construction boom,” says former Obama official and “Morning Joe” regular Steven Rattner, who highlights a surge in industrial construction that some economists are attributing to the Biden administration’s aggressive support for manufacturing.
Economist Noah Smith says the big jump in factory construction suggests that industrial policy, which many have seen as outdated, is having a positive effect. “How can we know if industrial policy is working? Well, one way would be if we actually start making more of the stuff that industrial policy tries to produce — more solar panels, semiconductors, electric cars, and so on,” he writes. “But it takes time to ramp up production, so in the meantime, we can look at how many factories are being built to make these things. And here, the U.S. seems to be getting pretty immediate and impressive results! Inflation-adjusted construction spending in the manufacturing industry has absolutely skyrocketed since June 2022, from $90 billion to $189 billion. That’s an incredible amount. Factory construction spending more than doubled in one year, after being essentially constant for decades. And it perfectly lines up with the passage of the CHIPS Act in July 2022 and the Inflation Reduction Act in August 2022.”
Economist Paul Krugman notes that the evidence indicates that the approach taken by President Biden’s predecessor, which focused on tax cuts and tariffs, did not work. “The Trump tax cut of 2017, which was sold as a way of promoting U.S. investment, didn’t have any visible effect,” Krugman writes. Neither did the trade war, which kicked off in earnest in mid-2018. But under Biden, manufacturing construction, as some people put it, has gone parabolic, more than doubling just over the past year.”