Manufacturing Boom Ignored by Wall Street Journal
This week, the Wall Street Journal proclaimed that “American manufacturing is in retreat and President Trump’s tariffs won’t help.” However, recent data from the Federal Reserve and the Commerce Department presents a very different picture—one of increased production, rising demand, and significant business investment.
In fact, manufacturing isn’t in retreat; it’s thriving, with industrial output reaching record highs. We saw those records broken in both November and December.
The disconnect between the Wall Street Journal’s narrative and the Federal Reserve’s numbers highlights a broader misunderstanding of how to assess the health of manufacturing in today’s productivity-driven economy.
Growth in Business Equipment Surges to Two-Decade High
The Federal Reserve’s industrial production report released Wednesday indicates that manufacturing output is on the rise, not in decline. The manufacturing production index increased from 95.77 in January 2025 to 98.24 in January 2026, marking a 2.6% year-over-year growth. Notably, January 2026 represents the highest level recorded to date.
Manufacturing production alone saw a 0.6% increase in January, described by the Fed as “the largest monthly increase since February 2025,” with significant gains across various industry sectors. Durable manufacturing output climbed by 0.8%, reflecting growth in nearly all component categories.
Particularly noteworthy is the production of office equipment, a crucial investment indicator. Last year, this category surged by 9.8%, the most substantial increase in 20 years. January’s production rose by another 0.9%, putting it 9.3% higher than the same time last year.
Transportation equipment production saw a 27% increase over the past year, while information processing equipment grew by 5%, and industrial equipment rose by 3.6%. This pattern clearly shows that the sector is not in retreat.
The Census Bureau’s durable goods orders report, released concurrently with the production statistics, further affirms this expansion narrative. Total durable goods orders are expected to jump by 7.8% in 2025, with core capital goods orders climbing 3.5%. Orders for various categories, like machinery and computers, also exhibited significant growth.
This trend is likely a response to President Trump’s unique economic strategies, which prioritize capital investment and incentivize businesses to upgrade their machinery and equipment. Tariffs are encouraging manufacturers to order from domestic suppliers, while changes in immigration policy have compelled companies to invest in productivity-boosting innovations instead of merely expanding their workforce.
Production, Not Jobs, Should Measure Economic Health
While the Wall Street Journal focuses on job losses from the past year, this narrow perspective can cloud the overall picture. Trade analyst Alan Tonelson has documented how, even within employment figures, the January employment report indicates that President Trump effectively halted job losses that were exacerbated by Biden’s anti-manufacturing policies.
A recent index revision reveals a loss of 98,000 manufacturing jobs from March 2024 to March 2025, primarily during the Biden administration. This contrasts starkly with the 81,000 jobs lost in the first 11 months of Trump’s second term. During February 2024, under Biden, the sector cut 179,000 jobs—more than twice the losses under Trump.
The analysis becomes even more compelling when examining the period after Trump’s tariffs were introduced in April 2025. Manufacturing lost 72,000 jobs from April to December 2025, while the same period in 2024 under Biden saw a cut of 160,000 positions—nearly 2.2 times the losses. January 2026 notably marked the first time in over a year that manufacturing added 5,000 jobs.
If the Wall Street Journal’s theory about negative impacts from tariffs were correct, we might expect job losses to worsen post-implementation. Instead, the data suggests a significant reduction in manufacturing job losses during the tariff period, compared to the Biden administration.
The Journal’s framing demonstrates a common analytical error: using employment surveys as a primary metric for assessing manufacturing health rather than actual production data. In an economy constrained by labor, this approach misdiagnoses overall economic health.
In the wake of the financial crisis, high unemployment rates made it logical to view job growth as a key economic indicator. However, in a climate of full employment, this focus has shifted considerably.
The Journal fails to mention that productivity in manufacturing rose by 3.3% in Q3 of 2025, with output increasing by 2.6% despite a 0.7% decrease in working hours. Over the past year, productivity in manufacturing saw its best performance since 2021, rebounding significantly from prior lows.
The article also comments on increased manufacturing construction spending during the Biden administration; however, this should be perceived as a one-time surge offset by future declines. Federal spending under Biden essentially pulled forward construction projects planned for later periods.
Recovery in Productivity
While the Wall Street Journal attributes the manufacturing downturn to tariffs, this timing does not align with reality. Manufacturing output indeed dipped in the final quarter of 2024, prior to the tariffs, yet productivity, output, wages, and capital investment all experienced a recovery throughout 2025, showing consistent improvements.
The upcoming data release reveals that manufacturing production is on the upswing, with capital goods orders increasing dramatically, productivity at its highest pace in years, and wages growing over 4% annually—outpacing inflation. Office equipment production is recording the greatest increase in the past two decades.
This reflects an economy in the midst of a substantial expansion, not a recession in manufacturing.
