One Huge Problem
Auto production took the steepest hit but it has since recovered.
Aircraft and aircraft parts production fell off a cliff and cannot get back up.
Industrial Production Components 1985-Present
Cyclical Industries
The long-term chart shows the hugely cyclical nature of the aircraft industry, often unrelated to recessions.
Recoveries for autos and aircraft can be lengthy. But in this case, auto production recovered quickly based on the Fed’s Industrial Production report this morning.
For more details and charts, please see Huge Miss in Industrial Production Output vs Expectations.
Index Levels Don’t Tell the Full Story
Neither Index levels nor percentage moves tell the full story. The pertinent numbers are the actual values of production components.
Manufacturers’ Value of New Orders
The above image is the right hand portion of Table 2 in the Monthly Report On Manufacturers’ Shipments, Inventories and Orders
for July 2020.
Year-to-Date Synopsis Through July
- Manufacturing down $329.782 billion. Of which durable goods were down $204.551 billion and non-durable goods were down $125.231 billion.
- Transportation was down $167,861 billion. Aircraft accounted for $88.505 billion of the loss. The negative year-to-date number is order cancellations.
- $88.505 billion is is over half of the transportation loss and 43% of the durable goods loss.
One Huge Problem and Lots of Small Ones
Aircraft is the huge problem but nondurable goods, primary metals, and machinery are more than big enough to matter.
How Long Will It Take For the Airline Industry to Recover?
It’s possible autos have stabilized but I do expect another swoon down as the recovery stalls.
Aircraft is another matter.
For details and discussion, please see How Long Will It Take For the Airline Industry to Recover?
Mish
Maybe I can dodge the still artificially inflated housing market by making a home in a fire sale jumbo jet.
Autos are going to have problems with fleet sales, the rental companies are in the toilet.
Something to keep in mind for the farther future: Any outfit in the transportation business has fiber optics as a dangerous competitor.
Watch the world of humans separate out like the leopard’s spots.
And watch for a split between how humans interact with those with whom they can touch and those who are separated by fiber optics. The current tone of on-line discourse tells us the road ahead will be bumpy.
I think every internet connected device should be connected to a robot boxing glove. Every time someone posts something on the internet, a button appears next to what they said, that, when pressed, causes the robot boxing glove to smack the poster smartly in the face.
It would be a take on the big brother experience familiar to those with male elder siblings, and I think things would quiet down a bunch.
Trump: “The economy does better under the Democrats than the Republicans” https://www.youtube.com/watch?time_continue=2&v=fn3cTT6O1I4&feature=emb_logo
Aircraft … cannot get back up
Worst kind of problem for aircraft.
Mass layoffs coming big time in the next two weeks for all airlines. We are talking into the 100s of thousands of layoffs when associated travel businesses go under. BIGLY.