Last updateTue, 25 Oct 2016 6pm


BCG: Technology Matters to Economic Growth

Despite its starring role in business and everyday life, many economists openly question whether technology is visible in traditional economic metrics such as GDP, productivity, and corporate profits.

The Boston Consulting Group (BCG) shows that, on the contrary, declines in technology investment are followed by startling drops in all these measures of economic growth. Whenever companies cut back on technology spending in order to shore up profits—as companies in many industries are doing now—profits plunge. GDP also falls dramatically. Within a few years, labor productivity across the economy falls, as well. 

Mid-Atlantic Manufacturing Activity Expands More Than Expected

Results from the Federal Reserve Bank of Philadelphia’s October Manufacturing Business Outlook Survey suggest that regional manufacturing conditions continued to improve. Indexes for general activity, new orders, and shipments were all positive this month. But firms in the Mid-Atlantic region reported continued weakness in overall labor market conditions. Firms expect continued growth for manufacturing over the next six months and are becoming more optimistic about employment expansion. 

Fed’s Beige Book Points to Modest Economic Growth

Reports from the twelve Federal Reserve Districts suggest national economic activity continued to expand during the reporting period from late August to early October. Most Districts indicated a modest or moderate pace of expansion; however, the New York District reported no change in overall activity. Compared with the previous report, the pace of growth improved in the St. Louis, Kansas City, and Dallas Districts. Outlooks were mostly positive, with growth expected to continue at a slight to moderate pace in several Districts.

Manufacturing activity was mixed, and the strong dollar continued to dampen exports of manufactured goods, according to a few District reports. 

U.S. Factory Production Rose 0.2% In September

Industrial production edged up 0.1% in September after falling 0.5% in August. For the third quarter as a whole, industrial production rose at an annual rate of 1.8% for its first quarterly increase since the third quarter of 2015. Manufacturing output increased 0.2% in September and moved up at an annual rate of 0.9% in the third quarter.

In September, the production of durables remained unchanged, the production of nondurables increased 0.5%, and the production of other manufacturing (publishing and logging) fell 0.8%. Within durables, declines registered by primary metals, by machinery, and by aerospace and miscellaneous transportation equipment were offset by gains elsewhere. 

Federal Reserve Study: Manufacturing Good for Graduation Rates

Contrary to popular belief, students who grow up in regions where manufacturing employs a larger share of the workforce are more likely to finish high school and college than those who grow up in regions without a high manufacturing share.

“If we compare regions that specialize in college-degree-intensive industries, such as health care, with regions that do not specialize in these industries, we see a pattern that suggests continued inequality,” writes Stephan Whitaker, research economist at the Federal Reserve Bank of Cleveland. “In degree-intensive regions, cohorts of children born to non-college-graduate parents have higher shares of both high school dropouts and college graduates.” 


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