Industrial production in October: consistent with a very slow expansion

– by a New Deal Democrat

I call industrial production the King of Coinciding Indicators because, more often than any other indicator, it coincides with the peaks and troughs of economic activity as determined by the NBER, the official arbiter of recessions.

In contrast to retail sales, the news for October was not so good this morning. Although manufacturing output rose +0.2% to a new post-pandemic high, total output fell -0.1% for the month. Also, manufacturing data for July and August were revised down -0.1% each, and strong figures for September were revised down -0.4% to just +0.1%. As a result, total production did not decrease in the three months from July:

This sideways trend in total output is often seen before recessions, but also coincides with slowdowns during expansions (see e.g. 2018-19), so it’s not particularly positive for anything. Unfortunately FRED doesn’t have a tool to create 3 month moving averages (the only big flaw of this site imo), but I can show you roughly this by plotting the change quarter by quarter for the last 60 years, ending July-September quarter:

Note, for example, the negative values ​​of q/q during the 1966 and 2016 slowdowns.

This is a report consistent with a very slowly growing economy, but not yet in recession.

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