New Report Shows Regulation Is Also Hurting U.S. Manufacturing Growth

By Jon C. Ogg Updated Apr 28, 2:38AM EDT · Published Aug 21, 11:01AM EDT

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You have heard over and over that more and more regulation is hurting the banking and finance sector, but what about the good old manufacturing sector? A new report from NERA Economic Consulting was taken on behalf of the Manufacturers Alliance for Productivity and Innovation and its findings were that: “U.S. manufacturers are significantly impacted by the escalation in the volume and cost of compliance with federal regulations.”

The outcome after examining the impact of federal regulations on the U.S. economy as a whole (and the manufacturing sector in particular) showed that the cumulative inflation-adjusted cost of compliance for major manufacturing-related regulations rose at an annualized rate of 7.6% since 1998 while physical volume growth rates only rose by 0.4% and while GDP growth averaged 2.2% per year.

While we might question whether this is a “report on manufacturing with a manufacturer’s wish list,” another statistic jumps out: major regulations could reduce manufacturing output by up to 6% over the next decade, with the chemicals and petroleum products sectoral output could be on average 10% lower. It shows that some $500 billion in the value of shipments could be at risk and that manufacturing exports in 2012 could be lower by 17% without the regulatory costs.

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JON C. OGG

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About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.