Economy
Beyond Industrial Production, Has Capacity Utilization Peaked?
Published:
Last Updated:
Tuesday morning’s economic releases included a gain in industrial production for the month of June. Production rose by 0.3%, rather than the 0.2% consensus expected by Bloomberg. Capacity utilization also managed to come in marginally ahead of estimates at 77.8% rather than the 77.7% consensus.
The good news is that this industrial production reading was after slight decreases in May and in April. The bad news is that even though capacity utilization was at the top of the range and ahead, it is still running too low for a recovery. The net result is that factories and plants are only running at 77.8% of capacity.
If you look at this chart for the use of capacity from the St. Louis Federal Reserve, you begin to see what is happening. You also must keep in mind that this includes the factory closures that have been seen. Even after the jobs have been sent overseas and even after plants have been consolidated, the United States is running on lower and lower capacity utilization.
The peak of the 1980s and 1990s at 85% is probably not realistic for a goal in capacity utilization. Getting back to 80% or above, on the other hand, is something that should be a goal. Higher capacity means higher output, even if higher output can be milked out of lower capacity rates as we are seeing. Higher capacity utilization means more jobs.
By the way, did you know that your state’s unemployment rate is influenced by whether it was considered a red state or blue state by the electoral college? It is.
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.