Industrial production fell 0.6 percent in July on top of a negative 0.3 percentage point revision to June. Motor vehicle production was down 7.8 percent.
The Federal Reserve Industrial Production and Capacity Utilization report for July was a disaster.
- Industrial production fell 0.6 percent in July after increasing 0.3 percent in June. Early July shutdowns concentrated in the petrochemical and related industries due to Hurricane Beryl held down the growth of industrial production by an estimated 0.3 percentage point.
- Manufacturing output stepped down 0.3 percent as the index for motor vehicles and parts fell nearly 8 percent;
- Manufacturing excluding motor vehicles and parts rose 0.3 percent. The index for mining moved sideways while the index for utilities decreased 3.7 percent.
- At 102.9 percent of its 2017 average, total industrial production in July was 0.2 percent below its year-earlier level.
- Capacity utilization moved down to 77.8 percent in July, a rate that is 1.9 percentage points below its long-run (1972–2023) average.
The Bloomberg Econoday consensus estimate was a decline of 0.1 percent.
The Fed revised June revised lower by 0.3 percentage points from 0.6 to 0.3 percent making the decline look mote like 0.9 percent.
This was a bad report even accounting for Hurricane Berl.
Industrial Production Since 1999
In December of 2007 industrial production and manufacturing peaked one month before the start of the Great Recession.
Manufacturing has still not made another high.
The recent high in industrial production since the Covid pandemic is 103.55 in June. It would be fitting if that’s the top right as recession hits.
Retail Sales Surge In July from Smaller Negative Revision
Earlier today I commented Retail Sales Surge In July from Smaller Negative Revision
Advance retail sales rose 1.0 percent in July from a negative 0.2 revision led by Motor vehicles autos. I’m skeptical because of how auto sales are counted.
Motor vehicle sales allegedly surged 3.6 percent following a 3.4 percent decline last month.
Motor vehicle sales are counted when shipped from the manufacturer to the dealer no matter how long the cars sit on the lots. This grossly distorts auto sales.
I expect major negative revisions to the retail sales report.
The policies of the Biden administration have been a disaster from the first day he took office. Of course most of us knew this would happen, and that Biden was mentally unfit for the job. Mish of course as I remember was a rabid anti Trumper, and did everything he could to get Biden into office. So for all the money we have lost, and all the peoples lives that have been devastated over the past 4 years we owe Mish a big Thank You…..
Lack of auto sales are going to keep us in a recession for a long time. There will be a lot of layoffs related to autos. (Parts, mfg, sales) I think over 50% of the population can’t afford to buy a car (new or used). When my husband retired we downsized to one car due to maintenance and insurance costs.
Well look at that, “Declines”, and “Big Negative Revisions” who could of guessed?
We need more debt!!! I’ve been screaming from the mountain top ‘go for a trillion PER MONTH!!!’
Drop rates bigly… flood the world with easy money!!!!
Let’s have a look at what hyperinflation looks like. Instead of just looking at those dull black and white photos https://www.czerwona-skarbonka.pl/wp-content/uploads/2022/08/republika-weimarska_hiperinflacja-768×640.png we can watch on tiktok!!!
Industrial Production is almost exactly where it was in December 2007, yet real GDP has grown 35% since that time. Imagine tax receipts, employment & wage levels if industrial production had simply kept up with economic growth. This is the sector with pretty good jobs and benefits. This is the sector that, with the high value of the dollar and high interest rates, is at a competitive disadvantage in global trade and accounts for the lions’ share of our huge trade deficit. This is a consequence of deliberate economic and trade policy.
We blame China, but the problem is us.
Dimocrats hate smokestacks. Smells like money to me.
Another aspect of has to do with how wealth is spent. Confiscated (taxed) wealth by the government goes nearly 100% to consumption, which as the word implies, consumes wealth. Left in the private sector there is a high probability that a significant portion will be invested in wealth generating ventures like construction, agriculture, construction, manufacturing and intellectual property development. In my mind it is no coincidence that the growing role consumption has in our overall economy is correlated to our inability to fund our economy thus we borrow to the point we now borrow to pay interest on our debt. I doubt there is a fix to our mess that does not include reductions in the punitive regulation and taxation on the wealth generation component of our economy and cutting government expenditure. significantly. Basically, we are not going to tax and spend ourselves into prosperity.
American manufacturing jobs have died a slow death since the early 1970’s in part from automation and productivity implementation, but ultimately government regulations and free trade agreements from the 1990s have been the death blow to manufacturing.
Industrial production (accounting for inflation) should at least be at the same level it was in 2007 when it was at an all time high.
Lets see how many more jobs Ford and General Motors sends to Mexico.
Let’s see how many more jobs Ford and General Motors sends to Mexico?
I would guess it will be an abundance of Auto Manufacturers jobs. The Unions just foolishly gave big raises to EV workers, and announced losses of GV Union Jobs.
This will more than like slowly disband Unions over time, as they will not be needed for EV’s, and would be paid way too much for those extremely easy jobs to learn and do, practically overnight anyway.
This is the problem with Unions in America. They way overpay their workers with hourly rates and benefits. When added up, they make the expense of paying workers to produce vehicle’s way too high, to have them be affordable by most American Workers, and nearly all foreigners cant afford them.
So if you can’t sell them for profit, then you go out of business (Ex. GM and others). This helps America how exactly? American Workers how exactly?
So are we to then take our American made money, and send it to other countries, for there manufactured items, which are way cheaper, and just as good? I would guess that we have been, and will continue to do. Until unions are disbanded, unemployment is really high, and… Wait A Minute!! We Are Already There!!!
The sky is falling! Maybe the fed will cut 1% in September as by then the market will likely need it.
No worries folks, Kamala has just the fix.
https://mises.org/mises-wire/kamala-wants-price-controls-and-its-not-because-she-has-good-intentions?