More January numbers…numbers that are not as robust as the numbers that came from the fourth quarter. I just wrote Part 1 of this story.
The most recent numbers released are for industrial production and capacity utilization.
They are not that robust. Many economists contend that the slack off in numbers is due to the cold temperatures and the snow. These economists may be correct … but the weather has resulted in a lot of consumer expenditures that will not be available to go back into the purchase of consumer goods and cars and so forth. The weather resulted in a lot of spending for heat and electricity, for snow removal, for cold weather clothes, and for medicine.
We shall see in upcoming months whether of not more normal consumer spending will pick up.
Industrial production in January was 2.9 percent above the level achieved in January 2013. This is not a bad increase but it was not at the increased level we had observed the rebound in the fourth quarter of 2013.
For example, in the fourth quarter of 2013 the year-over-year rate of growth in industrial production was 3.3 percent. This was up from 2.6 percent in the third quarter and 2.0 percent in the second quarter.
Economic growth was definitely on the upswing and the increase through the latter part of 2013 paralleled the rising rates of growth experienced by real GDP.
I don't believe that the January number puts us too far off the path for a faster rate of growth in 2014. Obviously, we will have to see what happens over the next two months and see if there is any catching up from the January figures.
If bad weather is a factor in slower growth then the first half of February, at least in a large part of the country, may just result in some more pessimistic numbers.
We, therefore, may have to wait until April before we get numbers that indicate whether or not there has been some "catch up" from the weather impacted January and February.
We see the same trajectory in the numbers for capacity utilization. In January 2014, capacity utilization dropped to 78.5 percent. This was down from the fourth quarter, 2013, number, which was 78.7 percent.
Again, the drop off in January 2014 was not too bad. Yet, it is a falling off from the steady increases that took place in the United States economy in the second half of 2013. In the third quarter of 2013, capacity utilization was at 78.0 percent and in the second quarter it was 77.9 percent. In the latter half of 2012, capacity utilization was down around 77.5 percent.
The economy is recovery, and, in my mind, the economic recovery is accelerating to some degree. We are still not seeing a recovery that is as robust as most of the other post-World War II recoveries have been…but the economy is picking up a little more speed. And, the economy is also using a little more of it physical resources.
Besides the restructuring that is needed to improve growth rates, the economy needs a break from some of the additional bumps in the road that tend to set back the numbers. After four and a half years of this economic recovery, we need more evidence that things are really improving.