The above chart of industrial production from the FRED system shows that industrial production did not take off until the last quarter of the year. There is a good reason for that. Remember -- the reason for the slowdown was a systemic manufacturing situation. Briefly, inventories built but demand did not. As a result, there was a manufacturing recession where most of the lay-offs occurred in the manufacturing area. The charts below help to fill in the gaps.
The above chart shows that inventories built at the end of 1953 and the inventory/sales ratio rose, peaking in early 1954. As this ratio declined, industrial production came back on line, primarily starting in the fourth quarter of the year.
The lower chart shows shows that manufacturers placed more orders than there were sales for most of 1953 and 1954. This is what caused the slowdown. Remember that in 1954, there was no "just in time" inventory system; instead, businesses had to anticipate demand and place orders accordingly. As such, inventory build-ups were far more common.
