Industrial Production and Capacity Utilization declined much more than expected 0.8%in October according to the Fed report. Economists at Econoday forecast a 0.4% decline.
Key Points
- Industrial production fell 0.8 percent in October after declining 0.3 percent in September.
- Manufacturing production decreased 0.6 percent in October. Much of this decline was due to a drop of 7.1 percent in the output of motor vehicles and parts that resulted from a strike at a major manufacturer of motor vehicles.
- It’s not all strike-related. Weakness was across the board. Business equipment was down .06% month-over-month and a whopping 2.5% year-over-year.
- Construction is down for the third time in four months
Industrial Production vs Recessions
2014-2015 Energy Slump
This is not a replay of the 2014-2015 recession scare.
Trucking provide another recession warning: Freight Volumes Negative YoY for 11th Straight Month
Donald Broughton, founder of Broughton Capital and author the Cass Freight Index says the index signals contraction, possibly by the end of the year. That’s just one one month away.
Mike “Mish” Shedlock
Mish, John Hussman, Tuomus Malinen and others have been warning us for months that a reckoning is coming. These new economic data released over the past week make the coming upheaval seem very close at hand.
With China easing off on the gas petal, I think these warning signs are the real deal this time.
A few quotes for context:
Whoppingly, China accounted for over 50% of all capital investments in major economies between 2009 and 2017.
China seems to have reached the point where a moderate (normal) stimulus does not support the real economy anymore, and a flat-out debt-binge, á la 2015/2016, would flare up a debt crisis. This, quite simply, means that the global business cycle is at its end.
…global debt is growing faster than the world economy, and each new percent of economic growth is matched by an additional increase in the aggregate debt by 1.5–2%
The IMF noted that corporate debt-at-risk could rise to $19 trillion… [the IMF] warned that it will be impossible to service almost 40% of the corporate debt in the eight leading countries – the United States, China, Japan, Germany, Great Britain, France, Italy and Spain.
…the market for currency and loan derivatives exceeds $600 trillion (about $545 trillion in the United States alone), it’s clear that there are several ticking bombs.
Global debt… has reached an epochal, and practically-incomprehensible $244 trillion, the equivalent of more than three times global GDP…
CEOs stepping down at levels not seen since 2008…
They have been predicting the next crisis since 2009!
Not by my count, though I haven’t been keeping perfect track.