January 1<\/em>, 1994.<\/em><\/p>\n December 11<\/em>, 2001.<\/em><\/p>\n Think for a moment.<\/p>\n Give up?<\/p>\n Each of those three dates is one protectionists routinely identify \u2014 either explicitly or by implication \u2014 as marking a significant turn for the worse in Americans\u2019 economic fortunes due to international trade.<\/p>\n 1975<\/a> is the last year in which America ran an annual trade surplus. That year was the last to see the dollar value of Americans\u2019 exports of goods and services exceed the dollar value of Americans\u2019 imports of goods and services. Every year since then \u2014 2025 is on track to be the fiftieth \u2014 the United States has run annual trade deficits.<\/p>\n January 1, 1994<\/a>, is the date that the North American Free Trade Agreement (NAFTA) took effect. Despite some minor modifications and a name change (to United States-Mexico-Canada Agreement<\/a>, or USMCA) in 2020, this trade agreement remained in effect until just a few weeks ago when Pres. Trump unilaterally moved the US into violation of it.<\/p>\n December 11, 2001<\/a>, is the date on which China gained membership in the World Trade Organization (WTO), thus further increasing that country\u2019s trade with many other countries, including the US.<\/p>\n If you pay attention to pronouncements, discussions, and debates in the US over trade you\u2019ll regularly encounter laments about America\u2019s \u201cchronic trade deficits<\/a>\u201d (implying that new economic troubles began as 1975 ended), complaints about the depredations visited<\/a> on Americans by NAFTA (suggesting that Americans\u2019 economic fortunes began to worsen as 1994 dawned), and, of course, dire warnings<\/a> of the alleged economic dangers that we Americans encounter by trading with the Chinese (implying that America\u2019s economic health only took another turn for the worse as 2001 was coming to a close).<\/p>\n Fortunately, a great deal of relatively straightforward economic data allows us to put these common claims to the test. As is true of any economic data \u2014 which, after all, are drawn from an incredibly complex, dynamic, and ever-changing real-world economy \u2014 the data that I present below are incapable of proving<\/em> anything.<\/p>\n Counterfactuals can always be offered, and questions about classifications, excluded variables, missing data, measurement methods, and errors, are never off the table. Nevertheless, even imperfect data can be sufficiently accurate to be revealing. At any rate, when used honestly such data are often an important part \u2014 although never the exclusive part \u2014 of any sound analysis or argument about economic policy.<\/p>\n So here are six economic phenomena the trends in which are useful to consult to test the claims about trade described above:<\/p>\n These six phenomena by no means exhaust the potential data that are useful for judging the debate between protectionists and free traders, but they\u2019re a good start.<\/p>\n Among the most meticulous and informed scholars who research economic trends is the American Enterprise Institute\u2019s Scott Winship. His 2024 study Understanding Trends in Worker Pay over the Past 50 Years<\/em><\/a> (PDF) is well worth a full and careful read. Among other achievements, it reveals the many sloppy uses of statistics by pundits who argue that ordinary Americans are today no better off economically than were ordinary Americans when the White House was occupied by Gerald Ford. But for our purposes, what Winship shows in his Figure 6 suffices: Today, average inflation-adjusted total compensation (wages and fringe benefits) for workers in the nonfarm business sector is about 250 percent higher than it was in 1975, 100 percent higher than in the year NAFTA took effect (1994), and about 40 percent higher than when China joined the WTO (2001).<\/p>\n US industrial production is today (February 2025) at an all-time high. Its previous all-time high was in September 2018, after which it leveled off \u2014 perhaps due to Trump\u2019s first round of tariffs \u2014 and then fell (of course) during COVID. From the end of COVID until now it\u2019s been largely flat and just below its September 2018 level until finally eking out a new all-time high in February of this year.<\/p>\n One plausible culprit for this leveling-off is the barrage of tariffs that began in early-to-mid-2018 and were mostly retained during the Biden years. Because more than half of American imports are inputs used in domestic production<\/a>, these trade restrictions dampen the productivity of American producers.<\/p>\n Contrary to claims<\/a> too numerous to count, the American economy has not been deindustrialized. Americans today (January 2025) produce 153 percent more industrial output<\/a> than in 1975, 55 percent more than in January 1994, and 18 percent more than in December 2001.<\/p>\n Nor has the American economy\u2019s capacity to produce industrial output been, as is often asserted, \u201chollowed out<\/a>.\u201d America today has an industrial capacity<\/a> that is 146 larger than it was in 1975, 64 percent larger than in January 1994, and 12 percent larger than in December 2001. This reality is especially notable given that as we Americans grow richer, we spend more on services relative to what we spend on goods<\/a>.<\/p>\n In 2019 (the last year for which these data are available), the inflation-adjusted size of the US capital stock<\/a> was 178 percent larger than it was in 1975, 66 percent larger than in 1994, and 36 percent larger than in 2001.<\/p>\n The accompanying graph shows, from January 1939 through February 2025, manufacturing employment as a share of total nonfarm employment in the US.<\/p>\n It\u2019s true that the average monthly rate of decline in the share of workers employed in manufacturing has been very slightly faster from 1976 through today (February 2025), at 0.171 percent, than it was from 1954 through 1975, at 0.134 percent. But it\u2019s also true that the average monthly rate of decline in the share of manufacturing workers has slowed<\/em> since China joined the WTO. From January 1976 through November 2001, the share of manufacturing workers fell at an average monthly rate of 0.192 percent; from December 2001 through February 2025, that rate dropped to 0.146 percent.<\/p>\n Manufacturing employment as a share of total employment is falling not because of trade but because of improvements in labor-saving technologies<\/a>, combined with Americans\u2019 rising demand for services relative to the demand for goods.<\/p>\n If protectionists are correct that US trade deficits either push Americans further into debt to foreigners or result from Americans selling too many assets to foreigners, the net worth of American households would have fallen over the past half-century, as these years saw an unbroken string of annual US trade deficits. But the opposite has happened. As I explain in this short blog post at Caf\u00e9 Hayek<\/a>, the average inflation-adjusted net worth of a US household today (2024) is 232 percent higher than it was in 1975, 140 percent higher than in 1994, and 78 percent higher than in 2001. In short, we Americans have gotten richer as we\u2019ve run trade deficits and since NAFTA took effect as well as since China joined the WTO.<\/p>\n Again, none of these six trends in the data proves<\/em> that protectionists are mistaken to argue that freer trade and trade deficits have harmed America economically. But taken together they should at least put the burden of proof squarely and heavily where it belongs \u2014 namely, on protectionists. It is they, and not free traders, who advocate government-imposed restrictions on Americans\u2019 economic liberties.<\/p>\n The post Are Americans Worse Off Since NAFTA? The Data Say No<\/a> was first published by the American Institute for Economic Research (AIER)<\/a>, and is republished here with permission. Please support their efforts.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" What do the following three dates have in common with each other? 1975. January 1, 1994. December 11, 2001. Think for a moment. Give up? Each of those three dates is one protectionists routinely identify \u2014 either explicitly or by implication \u2014 as marking a significant turn for the worse in Americans\u2019 economic fortunes due …<\/p>\n","protected":false},"author":55,"featured_media":2406439,"comment_status":"close","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[],"class_list":["post-2406437","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics"],"_links":{"self":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts\/2406437","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/comments?post=2406437"}],"version-history":[{"count":3,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts\/2406437\/revisions"}],"predecessor-version":[{"id":2406442,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts\/2406437\/revisions\/2406442"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/media\/2406439"}],"wp:attachment":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/media?parent=2406437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/categories?post=2406437"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/tags?post=2406437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
Workers\u2019 Real Earnings<\/h2>\n
![\"\"](\"https:\/\/monetizemail.com\/magatoon\/wp-content\/uploads\/2025\/04\/image-8-1024x633-1.png\")
US Industrial Production<\/h2>\n
US Industrial Capacity<\/h2>\n
US Capital Stock<\/h2>\n
US Manufacturing Employment as a Share of Total Nonfarm Employment<\/h2>\n
I constructed this graph from two<\/a> different<\/a> data sources available at the St. Louis Fed\u2019s FRED data site<\/a>. As you can see,\u00a0 protectionists are correct when they note that manufacturing employment as a share of total employment has fallen since 1975, has continued to fall since 1994, and has fallen further still since 2001. But as you can also see, this trend dates back long before 1975. Excluding the wartime (November 1943) peak, manufacturing workers as a share of all nonfarm workers started falling rather steadily in 1954, 22 years before America began its still-unbroken run of annual trade deficits, 40 years before NAFTA, and 47 years before the WTO accepted China as a member.<\/p>\n
Inflation-adjusted Average Household Net Worth<\/h2>\n