This morning the Federal Reserve reported that industrial production fell 1.8 per cent in January. Total industrial output is just above 2002 levels, a 10.0% drop below January of last year. The capacity utilization rate for total industry fell to 72.0%, the lowest level since 1983.
Frankly, we can’t decide if it’s good news or bad news that we haven’t hit the lows of the 1982 recession, which was the lowest on record for as far back as the records go. The bright side: things aren’t as bad as they could be. The dark side: things could get worse.
Of course, troubles in the auto industry pushed the numbers down further than they otherwise might have been. But that was made up for by a colder than expected winter, which pushed up utilities. So don’t go blaming short-term problems here.
Calculated risk does a great job of summing up the importance of these numbers:
“This is a very sharp decline in industrial output. Industrial production is a key to the depth of the economic slowdown. Up until late last Summer, export growth had been strong, and the decline in industrial production had been mild. Now, with the global economy slowing sharply, industrial production and capacity utilization are falling off a cliff.”
(Click picture for bigger version, courtesy of Calculated Risk.)