This Is a Recession in Goods Production Too

The Federal Reserve:

Industrial Production and Capacity Utilization: Industrial production decreased 1.1 percent in August and was revised down in June and July to show smaller gains of 0.2 percent and 0.1 percent respectively. After little movement over the previous three months, factory output was down 1.0 percent in August, in part because of a drop of 11.9 percent in the production of motor vehicles and parts. Excluding motor vehicles and parts, the index for manufacturing decreased 0.3 percent...

For about a year we have been blessing the disconnect between financial chaos and construction depression on the one side and real-side economic "weakness" elsewhere in the economy. Let's hope the disconnect continues. But it looks as though it isn't: the recession has spread out from construction into goods production broadly.

Comments

[Steven Hansen:]

a simple question - industrial output down, construction down, employment down - how is it possible to have GDP growth?

2008 Sep 16 04:45 AM

[Jason Rines...:]

Inflation on energy added to the GDP. Exports did make an impact and the rest is hedonics and under/over reporting. It is the very way GDP is calculate that must be fixed. I don't bother looking at GDP anymore, I only care about M1 and M2 money supply which seems to be vaporizing.

2008 Sep 16 10:36 AM