This is the point of the story where many Americans typically glaze over because they see Michigan as a long-standing financial basket case of a state thanks to the shrinking U.S. auto industry. But the problem is that the broad decline of the manufacturing sector that has been underway in this country for decades now may threaten not just the long-term health of the economy but also the living standards of all but the wealthiest Americans.

“The whole country is now seeing the story that Michigan has been living with for a long time,” said Diane Swonk, chief economist at Mesirow Financial. “We have kicked the can so far down the road that now all we have is a cliff to fall off.”

“The recession merely revealed a reality that has been with us for a long time. We faced a growing gap in education and skills that we tried to fill with debt and credit, which gave us the illusion of growth.”…

None of this means a death spiral is inevitable. A growing number of economists and investors like PIMCO’s Gross say a fix exists: a comprehensive overhaul of America’s education system and retraining programs for the unskilled.

Some point to the example of how Germany’s manufacturing has rebounded a decade after the country was derided as the “sick man of Europe,” though they add the German experience shows reform is a long, hard road.

America is now the “sick man of the globe,” says John Silvia, chief economist at Wells Fargo. “The good news is the illness is not terminal.”