Question

Evaluate the following statement: " The graph in this recent FRED blog clearly indicates that U.S. manufacturing output has declined over the last twenty years. According to this graph, the primary reason for this manufacturing decline and high unemployment in manufacturing industries has been outsourcing."

Answer 1

The one reason for the decrease in manufacturing output is outsourcing. The US companies prefer countries where the cost of production is low and they outsource their manufacturing of goods. It leads to decrease in manufacturing consistently. It causes increase in unemployment rate as less of the goods are produced. The second reason is the cheaper imports available from the countries like China, Vietnam and other Asian nations that made US manufacturing to be less competitive. It caused them to decrease the output and lay off workers. As a result unemployment increases. The third reason is US companies shifting their manufacturing base from USA to countries like China and India. It made them save cost and become more competitive in international market. So, these are the some reasons, making manufacturing output to decrease and unemployment to increase.