Industrial and manufacturing production continue to falter
Industrial and manufacturing production continue to falter
– by New Deal democrat
I frequently call industrial production the King of Coincident Indicators, because so often the turning point in this metric has been at the peaks and troughs of the economy as a whole. That has not been the case since last September, when this indicator last peaked.
And it continued its declining trend in June. Total production declined -0.5%, and manufacturing production declined -0.3%:
On a YoY basis, total production is down -0.4%, and manufacturing production is down -0.3%:
As you can see, up until the recent past, such declines had almost always been recessionary. But since the “China shock” that began in 1999, there have been similar production declines that have not spread out into the wider economy.
Finally, here’s a look at the sub-sector of motor vehicle production:
This series is noisy, so while the big decline played a role in the declines in both total and manufacturing production in June, there is simply no way to know if this is simply one bad month, or the beginning of a downward trend.
The bottom line is that this important indicator continues to be negative. Recession has been avoided – at least so far – because of resolving supply bottlenecks in vehicle production and housing construction, and robust spending on services. As we saw above, June was a poor month for vehicle production. We’ll find out about housing construction later this week.
Industrial production continues to falter in May, Angry Bear, New Deal democrat
Yellen does not see recession in US
Bloomberg via Reuters – July 17
U.S. Treasury Secretary Janet Yellen said on Monday the United States was making good progress in bringing inflation down and she did not expect the U.S. economy to enter into a recession.
Yellen, speaking to Bloomberg TV from India during a meeting of Group of 20 finance officials, said slower growth in China could spill over to other economies, but the U.S. economy was on “a good path” to reducing inflation while the labor market remained strong.
“For the United States, growth has slowed, but our labor market continues to be quite strong. I don’t expect a recession,” Yellen said. “The most recent inflation data were quite encouraging.” …
US Recession appears less likely
NY Times – July 19
The recession was supposed to have begun by now.
Last year, as policymakers relentlessly raised interest rates to combat the fastest inflation in decades, forecasters began talking as though a recession — economic contraction rather than growth — was a question not of “if” but of “when.” Possibly in 2022. Probably in the first half of 2023. Surely by the end of the year. As recently as December, less than a quarter of economists expected the United States to avoid a recession, a survey found.
But the year is more than half over, and the recession is nowhere to be found. Not, certainly, in the job market, as the unemployment rate, at 3.6 percent, is hovering near a five-decade low. Not in consumer spending, which continues to grow, nor in corporate profits, which remain robust. Not even in the housing market, the industry that is usually most sensitive to rising interest rates, which has shown signs of stabilizing after slumping last year.
At the same time, inflation has slowed significantly, and looks set to keep cooling — offering hope that interest-rate increases are nearing an end. All of which is leading economists, after a year spent being surprised by the resilience of the recovery, to wonder whether a recession is coming at all.
“The chances of a soft landing are higher — there’s no question about that,” said Diane Swonk, chief economist at KPMG US, referring to the possibility of bringing down inflation without causing an economic downturn. “I’m more optimistic than I was six months ago: That’s the good news.” …
… Economists are wary of declaring victory prematurely — burned, perhaps, by past episodes in which they did just that. In early 2008, for example, a string of positive economic data led some forecasters to conclude that the United States had navigated the subprime mortgage crisis without falling into a recession; researchers later concluded that one had already begun.
But for now, at least, talk of worst-case scenarios — runaway inflation that the Fed struggles to tame, or “stagflation” in which prices and unemployment rise in tandem — has been ceding the conversation to cautious optimism. …