What Did Hamper Growth ‘In A Few Months’

Over here, on the other side of that ocean, the US economy can only dream of the low levels Chinese industry has been putting up this late into 2020. At least those in the East are back positive year-over-year. Here in America, manufacturing and industry can’t even manage anything like a plus sign.

Summer slowdown extends in Industrial Production.

According to the Federal Reserve, the outfit which has kept tabs on this economic sector for more than a century, the economic rebound from 2020’s big collapse bent the wrong way around July and hasn’t yet been able to curve its way back in the good direction. Over the four months since, through November, IP has come back by just a little over 2%.

While a 6.7% annual rate sounds fantastic – given where things stood even before COVID – it isn’t near enough to make up for the almost 17% drop March and April. Because of the clear and sustained slowdown, IP in November 2020 remained a very recession-like 5.5% below where it had been in November 2019.

And, lest we forget, US industrial output in November 2019 was already a touch (-0.4%) less than it had been in November 2018. Landmines and their (ongoing) aftermath.

The implications, at least, are very simple and straightforward: as we’ve been saying since summer, the production side of the economy never bought the “V.” Largely because of this, this segment (which includes services; so much of the service sector is dedicated to managing, transporting, and selling what industry makes or extracts) hasn’t been hiring and rehiring near enough to create a recovery. Negative spillovers abounded.

Like the labor market, output isn’t even halfway. And that should boggle the mind given what would have happened if there had been a “V.” Economic activity beginning with industry should’ve not only rebounded to where it was prior in February (or November 2018, if we’re truly keeping score), it would’ve surged way above for at least a few months to make up for those when production was largely closed down.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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