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At what point (if even possible) does the manufacturing and physical goods based indicators lose their signaling status due to a more service based economy? Thi

At what point (if even possible) does the manufacturing and physical goods based indicators lose their signaling status due to a more service based economy? This question mainly revolves around advanced economies like the U.S, last quarter business investment was negative but consumer spending was robust. Services and healthcare are huge parts of the economy, are our indicators still as valuable? Granted, the global economy certainly seems like its close to recession territory, with no help from international tensions — just wondering if our measurements are losing their viability. Even Jay Powell cast doubt on the Phillips curve recently.

rogerkirkness 7y ago
I've eliminated entire line items of expenses thanks to software, buying quality and public transit that I feel like improved my life enormously but reduced my consumption a great deal. Less physical goods and effort: better for me.
- rangersanger 7y ago
  I’m assuming you’re talking about private app based transit here, not public busses and trains, based on the relationship to software. If that’s true you may be shifting the ownership of the physical goods used to transport you, but as long as they are private (as in no more efficient than a private car from a consumptive standpoint) there are just as many physical goods at play- more if you’re using any of the last mile scooter/bike/non-durable options out there
  - allana 7y ago
    OP is likely referring to Google Maps Transit, One Bus Away and similar bus/train tracking apps making public transit predictable and usable for their lifestyle, not the piecework economy of private taxis like Uber & Lyft.
MrEldritch 7y ago
As long as humans continue to exist in the physical world, take up physical space, and consume physical goods for food, shelter, and comfort, then manufacturing will be a critically relevant part of the economy.
- nostrademons 7y ago
  As long as humans continue to eat, agriculture will be a critically relevant part of the economy. We don't normally look at agricultural indicators like crop yields, arable crop land, rainfall, food prices, and commodity futures because agriculture's a small but critical part of the economy. In modern developed economies, under 5% of the population is employed in farming. So while soybean tariffs may be tragic for soybean farmers, they have little effect on the broader market, just as Bitcoin price crashes may have tragic effects on Bitcoin miners but the broader economy doesn't care. The assumption is that we have enough food, and as long as we continue having enough, metrics about how much food we produce aren't that important for measuring the overall health of economy. This despite those metrics being a critical factor in human population growth for millenia. Manufacturing is rapidly attaining the same status. We will continue to need stuff for the foreseeable future. However, as long as we have enough stuff, how manufacturers do is not terribly important to the broader economy, because they're a rapidly shrinking source of total spending. In many cases, when they're struggling it's because there's too much stuff and they can't find buyers for their products.
  - ben_w 7y ago
    This leads to two questions: (1) if it’s a small but critical part of the economy, could it make sense for it to switch to a centralised model? (2) what happens when we have “enough” services?
    - nostrademons 7y ago
      1) In agriculture at least it doesn't - many small competing producers can produce a lot more efficiently than one big one with no checks on inefficiency. There's a lot that's fucked up about Big Ag but most of the egregious stuff (like corn subsidies, or small sharecroppers being forbidden to own or save their own seeds because of IP restrictions) would be fixed by more competition and less government involvement. 2) The economy shifts into the next phase of development. I don't know what that'll be - artistic pursuits? space exploration? - but eventually the service industry will face the same fate as manufacturing and agriculture, and we'll move into a new economic era.
Excel_Wizard 7y ago
Once (if they ever) become non-scarce.
whatok 7y ago
Manufacturing PMI probably loses its leading indicator status once automation becomes more sophisticated. Many of the sub components of manufacturing PMI (new orders, inventories, etc) completely vanish in importance at that point. Considering there is virtually no inflation anywhere in the world at the moment, there's no incentive for businesses to really invest in this stuff at the scale required to really eliminate the human in the loop. Powell mentioned the Phillips curve because it's been borderline irrelevant for a while now due to unorthodox global central bank policies.
dcolkitt 7y ago
> Services and healthcare are huge parts of the economy, are our indicators still as valuable? That's true. But the value of manufacturing doesn't necessarily come from its total share of the economy, as much as it does from its fast responsiveness. Many services, both on the business and consumer sides, tend to be locked in for fixed contact terms. They also tend to be lumpy, either you buy the service or you don't. In contrast, most goods are purchased on-demand at the time they're needed. And it's easier to cut back gradually over time, by purchasing smaller quantities. Think of the difference between Netflix and Amazon. Netflix is purchased in monthly increments. It's also all-or-nothing. If a household's belt-tightening they might not cancel their streaming service until they're well into the contraction. In contrast they'll probably immediately dial back how much plastic crap they're ordering from Amazon almost immediately. So, even if manufacturing was only 1% of the overall economy, the high and fast responsiveness of its output to economic conditions makes it a good canary in the coal mine for the rest of the economy.
almost_usual 7y ago
If anything the United States has swayed too far into the service sector while ignoring its infrastructure. Without functioning infrastructure you can't have a service economy. Infrastructure requires manufacturing and product.
AI-ID84 7y ago
> 'At what possible point does the manufacturing and physical goods > lose their signaling status due to a more service based economy? There was a comic about (sorry, no translation this time...cos -there was another comic about translation P-: ) sry-no-more-hotlinking ^^//deviantart.com/4bigholidays/art/00222-BEEEB-BEEEB-BEEEB-809000483 (-;

rogerkirkness 7y ago

I've eliminated entire line items of expenses thanks to software, buying quality and public transit that I feel like improved my life enormously but reduced my consumption a great deal. Less physical goods and effort: better for me.

rangersanger 7y ago
I’m assuming you’re talking about private app based transit here, not public busses and trains, based on the relationship to software. If that’s true you may be shifting the ownership of the physical goods used to transport you, but as long as they are private (as in no more efficient than a private car from a consumptive standpoint) there are just as many physical goods at play- more if you’re using any of the last mile scooter/bike/non-durable options out there
- allana 7y ago
  OP is likely referring to Google Maps Transit, One Bus Away and similar bus/train tracking apps making public transit predictable and usable for their lifestyle, not the piecework economy of private taxis like Uber & Lyft.

MrEldritch 7y ago

As long as humans continue to exist in the physical world, take up physical space, and consume physical goods for food, shelter, and comfort, then manufacturing will be a critically relevant part of the economy.

nostrademons 7y ago
As long as humans continue to eat, agriculture will be a critically relevant part of the economy. We don't normally look at agricultural indicators like crop yields, arable crop land, rainfall, food prices, and commodity futures because agriculture's a small but critical part of the economy. In modern developed economies, under 5% of the population is employed in farming. So while soybean tariffs may be tragic for soybean farmers, they have little effect on the broader market, just as Bitcoin price crashes may have tragic effects on Bitcoin miners but the broader economy doesn't care. The assumption is that we have enough food, and as long as we continue having enough, metrics about how much food we produce aren't that important for measuring the overall health of economy. This despite those metrics being a critical factor in human population growth for millenia. Manufacturing is rapidly attaining the same status. We will continue to need stuff for the foreseeable future. However, as long as we have enough stuff, how manufacturers do is not terribly important to the broader economy, because they're a rapidly shrinking source of total spending. In many cases, when they're struggling it's because there's too much stuff and they can't find buyers for their products.
- ben_w 7y ago
  This leads to two questions: (1) if it’s a small but critical part of the economy, could it make sense for it to switch to a centralised model? (2) what happens when we have “enough” services?
  - nostrademons 7y ago
    1) In agriculture at least it doesn't - many small competing producers can produce a lot more efficiently than one big one with no checks on inefficiency. There's a lot that's fucked up about Big Ag but most of the egregious stuff (like corn subsidies, or small sharecroppers being forbidden to own or save their own seeds because of IP restrictions) would be fixed by more competition and less government involvement. 2) The economy shifts into the next phase of development. I don't know what that'll be - artistic pursuits? space exploration? - but eventually the service industry will face the same fate as manufacturing and agriculture, and we'll move into a new economic era.

Excel_Wizard 7y ago

Once (if they ever) become non-scarce.

whatok 7y ago

Manufacturing PMI probably loses its leading indicator status once automation becomes more sophisticated. Many of the sub components of manufacturing PMI (new orders, inventories, etc) completely vanish in importance at that point. Considering there is virtually no inflation anywhere in the world at the moment, there's no incentive for businesses to really invest in this stuff at the scale required to really eliminate the human in the loop. Powell mentioned the Phillips curve because it's been borderline irrelevant for a while now due to unorthodox global central bank policies.

dcolkitt 7y ago

> Services and healthcare are huge parts of the economy, are our indicators still as valuable? That's true. But the value of manufacturing doesn't necessarily come from its total share of the economy, as much as it does from its fast responsiveness. Many services, both on the business and consumer sides, tend to be locked in for fixed contact terms. They also tend to be lumpy, either you buy the service or you don't. In contrast, most goods are purchased on-demand at the time they're needed. And it's easier to cut back gradually over time, by purchasing smaller quantities. Think of the difference between Netflix and Amazon. Netflix is purchased in monthly increments. It's also all-or-nothing. If a household's belt-tightening they might not cancel their streaming service until they're well into the contraction. In contrast they'll probably immediately dial back how much plastic crap they're ordering from Amazon almost immediately. So, even if manufacturing was only 1% of the overall economy, the high and fast responsiveness of its output to economic conditions makes it a good canary in the coal mine for the rest of the economy.

almost_usual 7y ago

If anything the United States has swayed too far into the service sector while ignoring its infrastructure. Without functioning infrastructure you can't have a service economy. Infrastructure requires manufacturing and product.

AI-ID84 7y ago

> 'At what possible point does the manufacturing and physical goods > lose their signaling status due to a more service based economy? There was a comic about (sorry, no translation this time...cos -there was another comic about translation P-: ) sry-no-more-hotlinking ^^//deviantart.com/4bigholidays/art/00222-BEEEB-BEEEB-BEEEB-809000483 (-;