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This US manufacturing sector is booming

Cheer up, Donald Trump fans! It turns out there is an American manufacturing industry that is not only booming, but it's running a massive trade surplus of more than $100 billion per year. And it's chock full of factories and jobs that can never be moved overseas.

I'm hoping that most of you know I'm talking about aviation and defense... or the aerospace and defense industry as it's officially called. A new report from Deloitte says the sector's gross exports grew a healthy 3.6 percent to a whopping $143.3 billion in 2015. And the export part of the business has grown an incredible 59 percent just since 2010. Again, that's just exports, not the revenues received from contracts exclusive to the U.S. government.

It gets better because remember that unlike much of the tech and all of the financial services sectors, the weapons and aerospace business is very manufacturing intensive and national security rules keep those factories on U.S. soil. And here's the icing on the cake: Our No.1 foreign customer pushing up its massive trade deficit with the U.S. in this industry with virtually every purchase is none other than China.

A worker walks near a 747-8 airplane at the Boeing factory in Everett, Wash.
David Ryder | Bloomberg | Getty Images
A worker walks near a 747-8 airplane at the Boeing factory in Everett, Wash.

And 2016 is starting to look pretty good now that the U.S. government is reportedly close to approving the sale of a total of 60 F-15 and F/A-18E/F fighter jets to Qatar and Kuwait. That sale is worth $7 billion to Boeing, which makes those jets mostly at factories in good old St. Louis, Missouri. That deal would be the best sign in years that the defense part of this sector is set to soar again. And it could make it easier for Lockheed Martin to complete its many sales of its new F-35 Joint Strike Fighter to foreign allies.

Deloitte projected 3.2 percent growth for the sector this year, and that was before this news about the Kuwait and Qatar sales broke. Not bad in an overall economy that's growing at or a bit below 1 percent.

But why isn't this something the Obama administration, pro-labor groups, and everyone else in America is shouting about? You'd think an uniquely American industry doing so well and keeping jobs in the USA would be a primary bragging point for our politicians and economic boosters alike. If you guessed, "politics," you win a prize. Boeing and the White House have a sometimes rough relationship.

Ever since Boeing moved thousands of jobs to Right-to-Work South Carolina, the Obama administration and Democrats in general have been cool on the company. President Obama recently insisted he was at least the "second best" global salesman for Boeing, but no one is really buying that line. It's not that Boeing can afford to be totally partisan, it can't. But it's had to learn the hard way that this administration is not such a friend of our big domestic manufacturers.

That's just the commercial aircraft part of the story. On the defense side, despite the slump in American weapons sales overall in recent years, the U.S. remains the world's No.1 arms dealer with a hefty 33 percent of all global sales in 2015. But the weapons business makes a lot of people politically skittish or even hostile. Can you even imagine Bernie Sanders orHillary Clinton lauding the defense industry at their next campaign rally? Even the more pro-defense Republicans are often worried that too many sales to foreign countries aren't very wise, even if those countries are supposedly our allies. There's a lot of political capital to be gained by bashing, or at least reining in our defense contractors.

But economic realities are changing the nature of defense and aerospace demand across the world, and the U.S. will not be able to remain immune for long. Economic forces are driving the boom in defense spending just as much, if not more, than the threats from Iran, ISIS, North Korea, and the rising security concerns in Eastern Europe, Asia, and the sub-continent. The new economic demand is two fold. First, some of the world's top weapon-making nations need the revenues from the industry to boost their stagnant economies.

Russia is a great example of this, as Vladimir Putin's government needs to do something to stem the overall losses from the crude oil crash. Second, worldwide interest rates at or near zero percent have sent governments and large private investors alike scrambling to latch on to harder and more reliable assets. Weapons and jets, specifically fighter jets, bombers, naval warships, and even some portable missile defense batteries, are valuable hard assets that can be converted into other forms of wealth or valuable political influence. The possibilities are endless.

Russia seems to be working the hardest at pushing increased foreign weapons sales as a perfect way to get an economic boost and an upgrade in political prestige in one shot. Here's the question: Is Russia stirring up trouble in places like Syria and elsewhere at least in part to goose sales of its weapons systems? Stranger things have happened, and Putin hasn't been shy about crossing the line in the past. No one who cares about the value of human life should suggest the U.S. try to match Russia at what looks like its defense industry boosting adventurism, but if Russia keeps as busy as it is arming so many of our enemies and allies alike, Washington will have to respond in kind.

With the exception of Sanders, there's a very good chance whoever the next president is will boost domestic defense spending. Remember those impressive big numbers I quoted at the top of this column were for foreign sales only. Domestic defense spending has been stagnant for several years thanks to President Obama's cutbacks and the Republican-maintained spending sequester that began in 2013. If any Republican wins, even the unpredictable Trump, traditional GOP-backed defense spending increases are sure to follow. And even if presumptive Democratic nominee Hillary Clinton wins, I expect her to try to deflect any questions about her personal strength in office by boosting American defenses worldwide.

And those are just the the purely political reasons. Economically, a booming labor and manufacturing-heavy industry like defense would be a pretty stupid thing to weaken or destroy the way the government has already done to other industries like coal. Look for the next president to tamp down the pressure the Obama Administration has put on the Pentagon to make our ships and jets more climate change-friendly.

Look for the next president to see more clearly that most of the big defense output in this country takes place in five states, California, Connecticut, Georgia, Washington, and Texas. That's three blue and two red states, including the single biggest blue state and the single biggest red state. With the nation still starving for more manufacturing jobs, it's hard to believe the pendulum won't swing the other way pretty soon.

I just don't see the same number of bullish winds blowing for any other sector, certainly not one that employs so many people on U.S. soil. Not all of the reasons for this are comforting, but for those of us who believe a strong defense stops more wars than it causes, this is mostly a win/win.

Commentary by Jake Novak, supervising producer of "Power Lunch." Follow him on Twitter @jakejakeny.