U.S. economy outperforms EU

Recent economic indicators show the American economy is performing better than the European Union, with the flash PMI data from S&P Global for October indicating a strong dynamic in the U.S., while growth prospects in the euro zone are weakening.

Manufacturing recovery and job growth

Jonathan LaBerge from BCA Research notes that manufacturing activity is recovering, with job creation in the industry reaching its highest rate since March 2012. This trend aligns with Donald Trump’s campaign promises to bring manufacturing jobs back to the U.S., often using tariffs as a strategy.

PMI data shows mixed results

The manufacturing component of the PMI increased slightly to 56.0 from 55.9, while the services sector slowed to 57.9 from 58.8, falling just short of expectations. Despite this, the flash PMI suggests that American growth remains robust, with both manufacturing and services activity near their highest levels in several years.

Domestic and export demand

New orders in the manufacturing sector have slowed but remain high, showing strong domestic demand. New export orders have also returned to expansion territory for the first time this year, signaling a positive shift in international trade.

Skilled labor dominates new jobs

New manufacturing jobs are largely focused on skilled workers with expertise in automation, data analysis, or equipment design. Knowledge-intensive sectors like aerospace, computing, and electrical equipment have created jobs in the U.S. this year, often requiring higher education or specialized training.

Education and job accessibility

The aerospace industry, for example, employs more than half of its workforce with at least a bachelor’s degree, according to the Census Bureau. Similarly, the semiconductor industry, which is highly technical, mainly hires college graduates. These jobs are therefore mostly accessible to individuals with specific educational backgrounds or professional training, making them less available to those without such qualifications.

Trump’s focus on deindustrialization

Trump’s rhetoric on deindustrialization, which helped him win swing states in the Rust Belt, was primarily aimed at workers who had lost jobs due to offshoring. His promises included reviving industries like coal, which had declined in recent years.

Economic performance and inflation

The U.S. economy is showing strong performance, with 2.2% growth in the second quarter and an expected 3.5% in the third, according to the Federal Reserve of Atlanta. The unemployment rate stood at 4.2% in September, indicating a near-full employment situation, although job creation slowed that month.

Inflation remains a challenge

Inflation remains a significant issue, with rates at 3.7%, which is a concern for the Republican party. In 2024, persistent inflation contributed to the defeat of Democratic candidate Kamala Harris, despite the overall strong economic performance.

Voter perception and economic dissatisfaction

Economic studies suggest people are highly sensitive to inflation, often perceiving it as an injustice beyond their control, even when wages rise. This has led to widespread dissatisfaction among American voters, which could negatively impact the current presidential administration’s chances in the upcoming elections.