Thursday, December 17, 2015

Industrial production: the commodity collapse gets an assist frommother nature

 - by New Deal democrat

I wanted to follow up on yesterday's industrial production numbers.

First of all, here is the series broken down into manufacturing (blue), mining (red), and utilities (green):

As you can see, manufacturing, while unchanged for the month, continued at its highest point since 2007.  The downturn in mining (oil and metals) continues, while the unseasonably mild November weather in much of the nation caused utility production to cliff-dive.

Because 2001 was a business-led recession, where the consumer held up, let's take a look at the same 3 series through that time:

Manufacturing turned down a year before that recession.

Now let's see how overall industrial production fared at the time of the 2001 recession:

Let's compare that with the present downturn, including yesterday's number:

Our current shallow industrial recession is a little more than half of the depth of the downturn that became the 2001 recession, and at the moment the current downturn is much more concentrated in commodities, with an assist last month from global warming.

While the current shallow industrial recession is the biggest threat to the economy since 2009, it isn't yet at a point that makes me think that the economy as a whole is near a recession.  For that, I would expect to see a significant decline in manufacturing, and declines in consumer purchases of houses and cars.  right now, that's not happening.