The Fed’s Industrial Production and Capacity Utilization puts a big negative spotlight on the emerging V-shaped recovery thesis.
Industrial Production Highlights
- Industrial production increased a weaker than expected 1.4% in May. The Econoday consensus was 2.9%.
- A negative revision took April from -11.2% to -12.5% so essentially there was no rebound at all.
- Industrial production in May was 15.4% below its pre-pandemic level in February.
- Manufacturing output rose 3.8% in May but languishes near the lows in the Great Recession.
- At 92.6% of its 2012 average, the level of total industrial production was 15.3% lower in May than it was a year earlier.
- Capacity utilization for the industrial sector increased 0.8 percentage point to 64.8% in May, a rate that is 15.0 percentage points below its long-run (1972–2019) average and 1.9 percentage points below its trough during the Great Recession.
Manufacturing and Motor Vehicles and Parts
- Motor vehicles and parts production has “rebounded” to a level “below” the bottom of the 1990 recession.
- Manufacturing is at a 1988 level
Rebound Detail
V-Shape Recovery?
These numbers are not remotely close to anything one would ever associate with a V-shaped recovery.
Retail Sales vs Industrial Production
Earlier today I reported Retail Sales Surge Most on Record But Number is Misleading.
- Retail sales surged a greater than expected 17.7% in May but the numbers are still well below the pre-pandemic levels.
- Despite the surge, sales numbers are back to levels seen in late 2015 and early 2016.
Stimulus Checks
People got money and spent it, but they also skipped mortgage payments and credit card payments.
What happens when the checks run out?
Those Out of a Job
There are still 20 million people out of work.
It is foolish to believe they will all be back working the same number of hours at the end of June.
Fed vs Kudlow
- The Fed Warns of High Downside Risks
- Larry Kudlow says “The Economy is Off to the Races“.
True State of the Economy
Today’s dismal industrial production numbers put a better spotlight than retail sales on the true state of the economy.
Off to the Races Not
There are too many things that can go wrong and many of them will.
It will take years for this economy to recover.
Mish
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The shut down did not do this economy any good and now we can start counting the deaths as a result of the shut down. Alcoholism , drug addiction, delayed medical care will do the job, Unbelievable!!
What is worse than stimulus checks running out? Paying them back…
“Nearly 24,000 Ohioans told to return unemployment payments”
If the V-Shaped Recovery is incessantly broadcast via main stream media…
and the markets continue to levitate…
is it still a myth?
Spoiler Alert: the top 1% may answer differently.
Mike will defend Google’s right to demonitize Zerohedge. Remember he’s willing to stab his friends in the back so he can sell gold ETFs to pink hat socialists.
Who cares? most of us read these analysis in order to predict how the stock market will do.. Turns out there was a v-shaped recover in stock market, thanks to the bozos at the federal reserve, and that’s the only thing that matters
I think the fact that a currency is based off goods produced. Spending/Buying goods doesn’t make a country stronger from an economic standpoint.
If these number shows don’t rebound and the deficits stay high there will be a price to pay sooner rather than later. Money has to be based on something and momentum will only take it so far.
I-shaped recovery in stocks. Underscore-shaped recovery in jobs and wages. Green shoots everywhere else.
Best comment of the day!
Price signals?!?!
Federal Reserve destroyed fundamentals YEARS ago.
Today:
“It’s out of an excess of caution to preserve these gains for market function by following through,” Powell said during his semiannual testimony before Congress. “I don’t see us wanting to run through the bond market like an elephant snuffing out price signals, things like that.”
Industrial Production wobbly going into covid.
December … -0.4
January … -0.4
February … +0.1
“Retail sales shot up, but savings also shot up. How do we explain this discrepancy?”‘
Explained in depth.
Why the Amazing Leap in Savings Rate to Record 33 Percent?
Those mortgage/rent payments will still need to be made in the end no? So basically they will serve as a drag to spending in the future.
How many are getting more money being laid off with stimulus checks and unemployment enhancements?
Money will be wished into existence and handed out to rich people until the economy improves enough to get trump re-elected. This is their plan.
We manufactured plenty of $Dollars in May, with which to buy “stuff” that the rest of the world manufactures.
Retail sales shot up, but savings also shot up. How do we explain this discrepancy?
Someone somewhere must be feeling the pain.
See my comment below to answer your question.
Larry Kudlow is a Fat Donnie™ acolyte. And, an ignorant idiot.
Funny thing is, ‘conservatives’ hated Kudlow, until he became a member of The Swamp. Now they follow him like Moses.
Wrong.
You sort of have to be an ignorant idiot to hold a prominent position in financial reporting. The media doesn’t want people who can think in front of the camera.