U.S. Industrial Capacity Continues To Drop
Industrial production rose 0.6% in December in America. However, that reflected almost entirely a 5.9% gain in utilities (electricity) reflecting the cold weather conditions. Mining rose only slightly, and manufacturing fell slightly. While that slight fall followed a 0.9% gain in November, it was clearly a weak number, especially relative to the manufacturing purchasing manager's index.
What few have noticed in all of this is that manufacturing capacity is falling at a rapid pace. It was 1.3% lower in December 2009 than December 2008, and the pace is accelerating with capacity dropping 0.5% the last 3 months (which translates into a 2% rate.
The implications of this is stagflationary as lower capacity means in effect lower potential supply, and lower supply means both lower output and higher prices.
What few have noticed in all of this is that manufacturing capacity is falling at a rapid pace. It was 1.3% lower in December 2009 than December 2008, and the pace is accelerating with capacity dropping 0.5% the last 3 months (which translates into a 2% rate.
The implications of this is stagflationary as lower capacity means in effect lower potential supply, and lower supply means both lower output and higher prices.
<< Home