For the second day in a row, a major piece of economic data face-planted. Industrial production for the month of January declined -0.6%. Worse, almost all of the decline was in manufacturing.

This kind of decline is most consistent with the onset of a recession, or at very least a significant slowdown, as shown in these two long-term graphs covering the last 50+ years, which have been normed so that only a monthly decline in excess of -0.5% shows as negative:

1961-82

1982- present

Zooming in on this expansion, the YoY% change in industrial production, at 3.8%, while certainly backing off from its “boom” readings of half a year ago, is still in the high range of average:

While the combination of yesterday’s retail sales number for December and today’s January industrial production number are pretty awful, I recommend treating each with caution, for two reasons.

First, the government shutdown - which started in late December - may have had a bigger effect on production and consumption than earlier believed. If so, I would expect the situation to reverse in the next month or two.

Second, at least in the case of January, the worst cold snap in the last 30 years hitting the industrial heartland almost certainly had some effect on production. The typical rejoinder to this is that winter comes every year. But winter weather is particularly variable from year to year, and waxes and wanes over its three-month length at differing times from year to year as well.

So: definitely not good. Definitely consistent with a slowdown at least. But we need to see all of the data caught up through February before we can really judge if it is temporary or not.