January 10, 2018

The Future of U.S. Mining and Manufacturing is Bright

Conor Sen makes an important point about the energy sector:

Since [November 2016], the growth in hours worked has been robust, up 15.9 percent over the past year. The only faster growth in the past 30 years has been immediately following the financial crisis. This growth has a multiplier effect for workers in blue-collar communities, because stronger energy activity means higher demand for industrial equipment used in the energy sector, and more service-sector jobs in the communities supporting both energy production and manufacturing.

We are used to thinking of high prices as a drag on the U.S. economy because the U.S. has been, essentially for my entire life, a net energy importer. The shale revolution has changed that. The U.S. is now essentially energy independent and increasingly a net exporter. If trends in driving (lower) and in oil production (higher) continue, the U.S. could find itself a major energy exporter.

This is one of the reasons why I am not that concerned about the debt generally, and the debt owed to foreigners in particular. The dynamic nature of the U.S. economy and the resource wealth of North America combine to produce a natural export machine. That machine hasn’t been in operation, not because we lack the capacity, but because we are so wealthy that most of the world can’t afford U.S.-made products.

As the world catches up, we’ll find that both U.S. energy and manufacturing will be in high demand.