Hard on the heels of my criticism of US economic triumphalism comes the news that the US unemployment rate has risen from 5.7 per cent to 6 per cent, and that the Treasury Secretary (O’Neill) and economics advisor (Lindsey) have resigned. Digging a little further, it becomes apparent that in the core sector for productivity growth, manufacturing, things are grim indeed, with employment down by around 15 per cent over the last couple of years, and output also down sharply

Productivity growth in US manufacturing has been impressive, but, at least in part, it has been of the kind made famous by Margaret Thatcher. A lot of less-efficient plants have closed down and that automatically raises the average.

It would be easy to spin this into a declinist story. Playing the Zinsmeister extrapolation game, I could predict that the US will have double-digit unemployment in five years time and lose most of its manufacturing sector in ten.
Easy but silly. As I observed two years ago

nothing is more fickle than international economic fashion. It wasn’t that long ago that New Zealand was being hailed as a miracle economy. Some time in the next few years, no doubt, Japan will be booming while the US struggles to escape from recession. Japan’s problems will be forgotten while the malaise of American governance will be the focus of attention…. Yet when all the fuss has died down, the United States will still have the world’s richest economy, and most Americans will still enjoy high material living standards. America will still be the world’s dominant technological, economic and military, power.

Japan isn’t booming yet -it’s still paying the price for bad decisions made during the era of Japanese triumphalism. But it’s clear that the US economy has structural problems every bit as intractable as those that are evident in Europe.