The Consumer Economy Continues to Shrug Off Industry’s Woes

On Jan. 31, Caterpillar Inc. warned that sales of its heavy machinery would slump for a second straight year in 2020 amid “continued global economic uncertainty.” On the same day, Amazon.com Inc. added $72 billion in market value—about the size of Caterpillar—after reporting robust holiday season sales. That contrast shows just how much the U.S. industrial and consumer economies have diverged.

The manufacturing sector went through a mild recession last year as President Trump’s trade war with China added costs to supply chains and curtailed business investment. New data from the Institute for Supply Management show U.S. factory activity barely expanded in January after contracting in the last five months of 2019. Yet this industrial downturn was at most a blip for the still-roaring consumer spending spree.