October 2024
Regional Morsel: Reshoring grows roots in the South and Midwest
As reshoring activity increases, we find small businesses in the South and Midwest are notable beneficiaries.
Key takeaways
- The Infrastructure Investment and Jobs Act (IIJA), CHIPS and Science Act (CHIPS), and the Inflation Reduction Act (IRA) have spurred manufacturing and construction growth across the U.S. Within Bank of America small business account data, construction firms' average inflow-to-outflow ratio, which we view as a proxy for profits, has reached historically high levels for August.
- BofA Global Research estimates that for every $10 billion of manufacturing revenue that is moved back to the U.S., there is around $3.8 billion of capex spending. Our small business data shows notable payroll payment strength for manufacturing firms, with the South exhibiting the strongest growth in August. For construction firms, payroll growth was strongest in the Midwest.
- There are some signs that spending isn't robust across the board. Average credit card spending among small construction and manufacturing companies has fallen over the last year, a sign that the future growth of these sectors could be impacted by labor constraints and halted investment in clean energy manufacturing projects.
Read our full analysis for a more in-depth look at these trends.
