Wednesday, April 16, 2008

Industrial Production Growth Suggests No Recession

According to today's Federal Reserve release, industrial production grew in March at annual rate of 1.6% compared to the same month last year. Industrial production growth in March was higher than expected, and suggests that the U.S. economy is not in recession (see chart above showing industrial production growth in the last two recessions).

From First Trust Advisors: :"Industrial production surprised to the upside in March, undermining the theory the US is in recession. In the past six recessions – periods accumulating to about 5½ years – industrial output has only increased in six of those months. In the 2001 recession, industrial output did not climb even once."

Bloomberg story here.

9 Comments:

At 4/16/2008 1:40 PM, Blogger bobble said...

recession stuff aside, the chart
certainly displays how weak industrial production has been in the current decade as compared to the 1990's

 
At 4/16/2008 2:38 PM, Anonymous The Masked Millionaire said...

Good point Bobble.

 
At 4/16/2008 2:39 PM, Anonymous Fred said...

If you measure from the recession trough to the peak, This recovery has been much stronger than the '90s.

Why did the aftermath of the great '90s fall so far?

 
At 4/16/2008 6:25 PM, Blogger juandos said...

"Why did the aftermath of the great '90s fall so far?"...

Sarbox maybe?

 
At 4/16/2008 7:11 PM, Anonymous Anonymous said...

So what are you saying juandos.

That the cold weather in March was created by a short-circuited Sarbox which in turn cranked up the electrical and natural gas utilities at a 30% annual rate such that industrial production rose in the month.

Subject to revision, Q1.08 industrial production declined at a 1.4% annual rate.

My prediction: NBER dates the recession December 2007.

 
At 4/17/2008 3:40 AM, Blogger juandos said...

"That the cold weather in March was created by a short-circuited Sarbox which in turn cranked up the electrical and natural gas utilities at a 30% annual rate such that industrial production rose in the month"...

Was that a nation wide problem or a regional problem?

Locally that wasn't a problem at all...

BTW aren't energy costs driven in large part by the politicos we put in office?

So what are you saying, that this country has had two consecutive quarters with negative growth or is it slowing growth?

Is NBER really a, "nonpartisan research organization"?

 
At 4/17/2008 8:07 AM, Anonymous Anonymous said...

Is NBER really a, "nonpartisan research organization"?

It doesn't matter who they are; what matters is that they are the arbiters of official recessions and expansions.

I'm not certain whether NBER focuses on industrial production (IP) or the manufacturing component of IP to determine business cycle peaks. Manufacturing output peaked in September 2007 at 113.9 which was matched in January 2008, mining output peaked in December 2007 at 104.3, utility output peaked in January 2008 at 110.9. IP output peaked in January 2008 and contracted in the first quarter.

Private nonfarm payrolls peaked in November 2007.

All I know is that Perry's propensity to compare year over year data is next to useless to determine the monthly starting dates of recessions in real time. What matters is what happened last month, this month and next month, not last year.

 
At 4/17/2008 12:30 PM, Blogger juandos said...

"It doesn't matter who they are; what matters is that they are the arbiters of official recessions and expansions"...

Really? Serious question here since I thought (according to local news outlets) the Fed here in St. Louis supposedly that arbiter and not NBER...

"What matters is what happened last month, this month and next month, not last year"...

Hmmm, interesting but since there isn't much of a track record, aren't what they looking at a mere snap shot of the present day situation instead of what the trend is?

BTW the NBER link, thanks...

 
At 4/17/2008 2:45 PM, Anonymous Is said...

"What matters is what happened last month, this month and next month, not last year"...

You've obviously never done any horizontal financial statement analysis. It is an invaluable source of information. For example, comparing shopping spending on the day after Thanksgiving to the same day the prior year is a much better indicator than comparing this spending to the day prior. It works the same for comparing entire months. Was this comment serious?

 

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