Onshoring Is Happening Now. Don't Underestimate MAMA!

Don't underestimate "MAMA," which stands for “Making America Manufacture Again.” Manufacturers, large and small, domestic and foreign, are tapping into the trillions of dollars of incentives available in the CHIPS and Science Act, the Inflation Reduction Act (IRA), and the Infrastructure Investment and Jobs Act to build factories in the US. They plan to make semiconductors, batteries, solar equipment, electric vehicles (EVs), and green hydrogen, among other things. So many manufacturers have locked down locations for new plants that it’s now hard to find shovel-ready ‘megasites,’ an April 13 Reuters articlereported.

If the US manages to skirt a recession, it will be due in good part to the massive capital spending and building related to these plants. As we’ve noted before, capital spending in real GDP rose to a record high of $3 trillion (saar) during Q1-2023, and manufacturing construction put in place jumped 62.3% y/y through March to its latest record high of $147.4 billion. Many of the proposed factories have yet to break ground and are not reflected in these numbers. Assuming that the projects go forward, building and then operating these facilities should provide an economic tailwind.