Industrial production rose in February from huge negative revisions in January. Has Industrial Production peaked this cycle? Many charts suggest the answer is yes.
The Fed blames the weather for weakness in Industrial Production and Capacity Utilization in 2024.
Industrial production edged up 0.1 percent in February after declining 0.5 percent in January. In February, the output of manufacturing rose 0.8 percent and the index for mining climbed 2.2 percent. Both gains partly reflected recoveries from weather-related declines in January. The index for utilities fell 7.5 percent in February because of warmer-than-typical temperatures. At 102.3 percent of its 2017 average, total industrial production in February was 0.2 percent below its year-earlier level. Capacity utilization for the industrial sector remained at 78.3 percent in February, a rate that is 1.3 percentage points below its long-run (1972–2023) average.
Q: Is the Fed just discovering the January weather?
A: It appears so.
Industrial Production Revisions
January Revisions
- Industrial Production: -0.3 Percentage Points
- Manufacturing: -0.2 Percentage Points
- Motor Vehicles and Parts: -2.9 Percentage Points
- Aircraft and Parts: +0.1 Percentage Points
- Consumer Durable Goods: -2.3 Percentage Points
- Manufacturing Durable Goods: -2.4 Percentage Points
O.K. I get that warmer than usual weather might cut utility demand in January.
But is warmer than usual weather responsible for hugely negative revisions everywhere else except aircraft and parts?
Industrial Production Components Percent Change Year-Over-Year
Aircraft and parts, and motor vehicles and parts are both prone to major swings. Here is a look at the chart with those components stripped out.
Industrial Production and Manufacturing Percent Change Year-Over-Year
Stripped of the more volatile components, the trend is quite clear, and it isn’t pretty.
Durable goods manufacturing has been negative year-over-year for 9 consecutive months dating to June of 2023.
Somehow, I sense this is not weather related.
Has Industrial Production Peaked This Cycle?
That was my lead question. And my answer is yes. Here are the peak dates.
- Industrial Production Peak: 103.5 on 2022-09
- Manufacturing Peak: 101.2 on 2022-10
- Motor Vehicles and Parts Peak: 114.8 on 2023-07
- Aircraft and Parts Peak: 87.3 on 2024-01
- Consumer Durable Goods Peak: 109.4 on 2022-04
- Manufacturing Durable Goods Peak: 129.8 on 2023-01
I am sure glad Boeing has its act together because aircraft is the only thing holding up.
Then again, as I have noted At Boeing, Speed, Not Safety, Is the Company’s Top Concern
The above numbers are so miserable and housing has been so miserable that I wonder how we avoided recession (assuming we really did avoid recession).
Gross Domestic Income (GDI) suggests we did have a brief mild recession.
Real GDP and GDI in Billions of Dollars
Gross Domestic Product (GDP) and Gross Domestic Income (GDI) are two measures of the same thing. The BEA has not yet released GDI for the 4th quarter of 2023.
But we can see that GDI for the third quarter is lower than it was a year prior. That usually only happens in recessions.
The gap between GDP and GDI is one of the largest ever. I expect negative GDP revisions. If we skirted a recession, it was not by much.
What About Jobs?
Another seemingly strong jobs headline falls apart on closer scrutiny. The massive divergence between jobs and employment continued into February.
Payrolls vs Employment Gains Since March 2023
- Nonfarm Payrolls: 2,602,000
- Employment Level: +144,000
- Full Time Employment: -284,000
For more details of the weakening labor markets, please see Jobs Up 275,000 Employment Down 184,000
Has the US Consumer Finally Waved the White Flag on Spending?
The answer to the question appears to be yes, starting October of 2023. Six pictures of real vs nominal advance retail sales tell the story.
For discussion, please see Has the US Consumer Finally Waved the White Flag on Spending?
There are economic cracks in spending, cracks in employment, and cracks in delinquencies.
But there are no cracks in the CPI. It’s coming down much slower than expected. And the PPI appears to have bottomed.
Repeating what I said yesterday, Add it up: Inflation + Recession = Stagflation.
link to youtube.com
NAR lawsuit settlement
Don’t worry. Bill Gates will do something about the weather. Just like he will release genetically modified mosquitoes. The man needs to read “Frankenstein” preferably when he is locked in the most secure prison on earth for eternity
“Bill Gates will do something about the weather.”
Since changing the weather is so simple that any old random over-the-hill mediocrity can just “do something” about it and all….
…Talk about childish celebrity worship.
Ah yes, the weather excuse that I heard so many times as a securities analyst. It could have (very) occasional merit with this or that company from time to time, but I never recall it being used to explain national numbers. This is especially true of this winter, which really wasn’t out of the ordinary in any aggregate sense.
GDP is fine due to Inflationary pressures (Dollar Supply at peak levels) which is driving up Consumer prices. They should strip out DOLLARS only count VOLUMES of items sold.
If that were the case, WE ARE IN A RECESSION.
Goes to show how bad the government is in compiling accurate and actionable data.
Love to see someone chart real GDI per capita.
Why so negative? Bunch of black pill stuff going on and people are too lazy to improve their own lives….. we need more people like me offering easy answers and solutionzzz
Gas prices hurting your wallet? Easy – buy an EV and you won’t have to worry about it
You don’t have enough money? Easy – buy massively inflated dogshit like Nvda and you will be on the road to success like me
Rent soaring and you can’t afford it? Easy – go buy a house and pick up the bags of a boomer who has 3 of them that are 50% to 70% overpriced. At a minimum, everyone can afford a 75 year old crack house starter home for $500k
Food prices cutting in to your 3rd foreign vacation budget of 2024? Easy – grow your own at home because the $500k crack house you bought will have at least enough land/space to grow something in the ground or planters including fruit trees
Insurance rates skyrocketing and putting a dent in your designer handbag collection? Easy – insurance is over rated. Cancel them and use the savings on more spending on a new $5,400 Hermes bag
Health insurance bankrupting you? Easy – It’s really really simple actually. Just exercise more and take care of your own health. Plus with limited food, you should lose any excess weight really quickly which negates any need for health insurance.
If none of the above work out for you, just go get a govermment job and you too can retire early and confortably.
Stick around and follow me for more sunshine rainbow pills and simple financial advice to take you from negative Nancy and gloomy Glen to positive Patty in just a few easy steps……
😎🏖🏝
Such sage and practical advice! Life changing! You should have your own column, or even better a subscription service. Keep up the good work!
Nice. I would just add, load it on your credit card, because saving is anti-American. Special bonus is, if everybody follows this advice, the bailout is just round the corner.