July 19, 2018

What´s up with industrial production?

Is this a good description? “Industrial production jumped 0.6 percent in June, rebounding from a 0.5 percent drop in May. Over the past year, industrial production is up 3.8 percent, continuing a modest upward trend in growth.” That appears to be just a rebound from a significant previous drop. We´ll have to wait for more prints to see if an upward trend takes hold (unlikely). In “olden times”, a slightly smaller drop in industrial production was associated with a recession (2001). Why not recently?

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The US Federal Reserve this week released its latest Beige Book, a series of increasingly repetitious and unintentionally lugubrious reviews of the national economy. If you read the Fed’s Beige Book from January 2016, about two-and-half-years ago, then don’t read the July 2018 version.  Nothing has changed. The economy was and is and perchance always will be defined by “labor shortages.” A sampler from earlier Fed Beige Books: From the Fed’s Oct. 18 2017 rendition: “Labor markets were widely described as tight. These shortages were also restraining business growth.” January 2017: “District reports cited widespread difficulties in finding workers for… Read More

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