Saturday, March 21, 2020

Sharp Contraction of Valuations of Risk Financial Assets, Decrease of Cyclical Economic Indicators, FOMC Lowers Fed Funds Target Rate to Zero to One-Quarter Percent and Increases Holdings of Securities in the Fed Balance Sheet, Recovery Without Hiring in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide, Ten Million Fewer Full-Time Jobs, United States Industrial Production Underperforming Below Trend, Squeeze of Economic Activity by Carry Trades Induced by Zero Interest Rates, Probable Global Recession, World Cyclical Slow Growth, and Government Intervention in Globalization: Part II


Sharp Contraction of Valuations of Risk Financial Assets, Decrease of Cyclical Economic Indicators, FOMC Lowers Fed Funds Target Rate to Zero to One-Quarter Percent and Increases Holdings of Securities in the Fed Balance Sheet, Recovery Without Hiring in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide, Ten Million Fewer Full-Time Jobs, United States Industrial Production Underperforming Below Trend, Squeeze of Economic Activity by Carry Trades Induced by Zero Interest Rates, Probable Global Recession, World Cyclical Slow Growth, and Government Intervention in Globalization

Carlos M. Pelaez

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020

I Recovery without Hiring

IA1 Hiring Collapse

IA2 Labor Underutilization

ICA3 Ten Million Fewer Full-time Jobs

IA4 Theory and Reality of Cyclical Slow Growth Not Secular Stagnation: Youth and Middle-Age Unemployment

I United States Industrial Production

IIB Squeeze of Economic Activity by Carry Trades Induced by Zero Interest Rates

III World Financial Turbulence

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

IIID Appendix on European Central Bank Large Scale Lender of Last Resort

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

Foreword. Selected Cyclical Economic Indicators. There is decline of economic indicators in China for Jan-Feb 2020 relative to Jan-Feb 2019.

Table F, China, Economic Indicators

Indicator

Period

Percent Change

Value Added Industry

Jan-Feb 2020/Jan/Feb 2019

-13.5

Retail Sales Consumer Goods

Jan-Feb 2020/Jan/Feb 2019

-20.5

Investment Fixed Assets

Jan-Feb 2020/Jan/Feb 2019

-24.5

Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/PressRelease/

The diffusion index of the Federal Reserve Bank of New York for Mar 2020 shows contraction for the Current General Index and Current New Orders.

Table VA-1, US, New York Federal Reserve Bank Empire State Manufacturing Survey Index SA

Current General Index

Current New Orders

Future General Index

Future New Orders

3/31/2020

-21.5

-9.3

1.2

17.6

Source: Federal Reserve Bank of New York

https://www.newyorkfed.org/survey/empire/empiresurvey_overview.html

The diffusion index of the Federal Reserve Bank of Philadelphia shows contraction for the Current General Index and Current new Orders.

Table VA-2, US, Federal Reserve Bank of Philadelphia Business Outlook Survey, SA

Current General Index

Current New Orders

Future General Index

Future New Orders

Mar-2020

-12.7

-15.5

35.2

36.7

Source: Federal Reserve Bank of Philadelphia

https://www.philadelphiafed.org

There is typically significant difference between initial claims for unemployment insurance adjusted and not adjusted for seasonality provided in Table VII-2. Seasonally adjusted claims increased 70,000 from 211,000 on Mar 7, 2020 to 281,000 on Mar 14, 2020. Claims not adjusted for seasonality increased 50,517 from 200,375 on Mar 7, 2020 to 250,892 on Mar 14, 2020.

Table VII-2, US, Initial Claims for Unemployment Insurance

SA

NSA

4-week MA SA

Mar 14, 2020

281,000

250,892

232,250

Mar 07, 2020

211,000

200,375

215,750

Change

+70,000

+50,517

+16,500

Feb 29, 2020

217,000

216,982

214,000

Prior Year

219,000

194,335

221,750

Note: SA: seasonally adjusted; NSA: not seasonally adjusted; MA: moving average

Source: https://www.dol.gov/ui/data.pdf

II United States Industrial Production. There is socio-economic stress in the combination of adverse events and cyclical performance:

and earlier http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/fluctuating-financial-asset-valuations.html and earlier http://cmpassocregulationblog.blogspot.com/2015/05/fluctuating-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2015/01/exchange-rate-conflicts-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html and earlier http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2014/10/imf-view-squeeze-of-economic-activity.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html)

Industrial production increased 0.6 percent in Feb 2020 and decreased 0.5 percent in Jan 2020 after decreasing 0.4 percent in Dec 2019, with all data seasonally adjusted, as shown in Table I-1. The Board of Governors of the Federal Reserve System conducted the annual revision of industrial production released on Mar 27, 2019 (https://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm):

“The Federal Reserve has revised its index of industrial production (IP) and the related measures of capacity and capacity utilization.[1] On net, the revisions to the growth rates for total IP for recent years were small and positive, with the estimates for 2016 and 2017 a bit higher and the estimates for 2015 and 2018 slightly lower.[2] Total IP is still reported to have increased from the end of the recession in mid-2009 through late 2014 before declining in 2015 and rebounding in mid-2016. Subsequently, the index advanced around 7 1/2 percent over 2017 and 2018.

Capacity for total industry expanded modestly in each year from 2015 to 2017 before advancing 1 1/2 percent in 2018; it is expected to advance about 2 percent in 2019. Revisions for recent years were very small and showed slightly less expansion in most years relative to earlier reports.

In the fourth quarter of 2018, capacity utilization for total industry stood at 79.4 percent, about 3/4 percentage point above its previous estimate and about 1/2 percentage point below its long-run (1972–2018) average. The utilization rate in 2017 is also higher than its previous estimate.”

The report of the Board of Governors of the Federal Reserve System states (https://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production rose 0.6 percent in February after falling 0.5 percent in January. Manufacturing output edged up 0.1 percent in February; excluding a large gain for motor vehicles and parts and a large drop for civilian aircraft, factory output was unchanged. The index for mining declined 1.5 percent, but the index for utilities jumped 7.1 percent, as temperatures returned to more typical levels following an unseasonably warm January. At 109.6 percent of its 2012 average, the level of total industrial production in February was unchanged from a year earlier. Capacity utilization for the industrial sector increased 0.4 percentage point in February to 77.0 percent, a rate that is 2.8 percentage points below its long-run (1972–2019) average.” In the six months ending in Feb 2020, United States national industrial production accumulated change of minus 0.1 percent at the annual equivalent rate of minus 0.2 percent, which is higher than growth of 0.0 percent in the 12 months ending in Feb 2020. Excluding growth of 0.9 percent in Nov 2019, growth in the remaining five months from Sep 2019 to Feb 2020 accumulated to minus 1.0 percent or minus 2.4 percent annual equivalent. Industrial production increased 0.9 percent in one of the past six months, 0.6 percent in one month, minus 0.5 percent in one month, minus 0.4 percent in two months and minus 0.3 percent in one month. Industrial production decreased at annual equivalent 1.2 percent in the most recent quarter from Dec 2019 to Feb 2020 and increased at 0.8 percent annual equivalent in the prior quarter from Sep to Nov 2019. Business equipment accumulated change of minus 3.7 percent in the six months from Sep 2019 to Feb 2020, at the annual equivalent rate of minus 7.3 percent, which is lower than growth of minus 3.7 percent in the 12 months ending in Feb 2020. The Fed analyzes capacity utilization of total industry in its report (https://www.federalreserve.gov/releases/g17/Current/default.htm): ” Capacity utilization for the industrial sector increased 0.4 percentage point in February to 77.0 percent, a rate that is 2.8 percentage points below its long-run (1972–2019) average.” United States industry apparently decelerated to a lower growth rate followed by possible acceleration and weakening growth in past months. There could be renewed growth with oscillations.

Table I-1, US, Industrial Production and Capacity Utilization, SA, ∆% 

Feb 20

Jan 20

Dec 19

Nov 19

Oct 19

Sep 19

Dec 19/

Dec 18

Total

0.6

-0.5

-0.4

0.9

-0.4

-0.3

0.0

Market
Groups

Final Products

1.2

-1.5

-1.0

1.9

-0.3

-0.8

-0.7

Consumer Goods

1.7

-1.1

-1.3

2.1

-0.1

-0.7

0.2

Business Equipment

-0.4

-3.0

-0.4

2.1

-0.8

-1.2

-3.7

Non
Industrial Supplies

0.1

0.5

0.0

0.2

-0.3

0.0

0.6

Construction

-0.4

1.4

0.7

-0.2

-0.5

0.1

2.0

Materials

0.2

0.1

-0.1

0.3

-0.6

-0.1

0.5

Industry Groups

Manufacturing

0.1

-0.2

0.1

0.9

-0.6

-0.6

-0.4

Mining

-1.5

1.0

0.8

-0.7

-0.1

-0.1

2.1

Utilities

7.1

-4.9

-5.7

3.0

0.3

1.4

0.4

Capacity

77.0

76.6

77.1

77.6

77.0

77.4

2.0

Sources: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

Manufacturing increased 0.1 percent in Feb 2020 and decreased 0.2 percent in Jan 2020 after increasing 1.0 percent in Dec 2019, seasonally adjusted, decreasing 0.2 percent not seasonally adjusted in the 12 months ending in Feb 2020, as shown in Table I-2. Manufacturing changed cumulatively minus 0.3 percent in the six months ending in Feb 2020 or at the annual equivalent rate of minus 0.6 percent. Excluding the increase of 0.9 percent in Nov 2019, manufacturing decreased 1.2 percent from Sep 2019 to Feb 2020 or at the annual equivalent rate of minus 2.8 percent. Table I-2 provides a longer perspective of manufacturing in the US. There has been evident deceleration of manufacturing growth in the US from 2010 and the first three months of 2011 with recovery followed by renewed deterioration/improvement in more recent months as shown by 12 months’ rates of growth. Growth rates appeared to be increasing again closer to 5 percent in Apr-Jun 2012 but deteriorated. The rates of decline of manufacturing in 2009 are quite high with a drop of 18.6 percent in the 12 months ending in Apr 2009. Manufacturing recovered from this decline and led the recovery from the recession. Rates of growth appeared to be returning to the levels at 3 percent or higher in the annual rates before the recession, but the pace of manufacturing fell steadily with some strength at the margin. There is renewed deterioration and improvement. The Board of Governors of the Federal Reserve System conducted the annual revision of industrial production released on Mar 27, 2019 (https://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm):

“The Federal Reserve has revised its index of industrial production (IP) and the related measures of capacity and capacity utilization.[1] On net, the revisions to the growth rates for total IP for recent years were small and positive, with the estimates for 2016 and 2017 a bit higher and the estimates for 2015 and 2018 slightly lower.[2] Total IP is still reported to have increased from the end of the recession in mid-2009 through late 2014 before declining in 2015 and rebounding in mid-2016. Subsequently, the index advanced around 7 1/2 percent over 2017 and 2018.

Capacity for total industry expanded modestly in each year from 2015 to 2017 before advancing 1 1/2 percent in 2018; it is expected to advance about 2 percent in 2019. Revisions for recent years were very small and showed slightly less expansion in most years relative to earlier reports.

In the fourth quarter of 2018, capacity utilization for total industry stood at 79.4 percent, about 3/4 percentage point above its previous estimate and about 1/2 percentage point below its long-run (1972–2018) average. The utilization rate in 2017 is also higher than its previous estimate.”

Manufacturing decreased 22.3 percent from the peak in Jun 2007 to the trough in Apr 2009 and increased 18.3 percent from the trough in Apr 2009 to Dec 2019. Manufacturing grew 19.2 percent from the trough in Apr 2009 to Feb 2020. Manufacturing in Feb 2020 is lower by 7.4 percent relative to the peak in Jun 2007. The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. US economic growth has been at only 2.3 percent on average in the cyclical expansion in the 42 quarters from IIIQ2009 to IVQ2019. Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 2010 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (http://bea.gov/iTable/index_nipa.cfm) and the second estimate of GDP for IVQ2019 (https://www.bea.gov/system/files/2020-02/gdp4q19_2nd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.8 percent obtained by dividing GDP of $15,557.3 billion in IIQ2010 by GDP of $15,134.1 billion in IIQ2009 {[($15,557.3/$15,134.1) -1]100 = 2.8%], or accumulating the quarter on quarter growth rates (https://cmpassocregulationblog.blogspot.com/2020/02/sharp-worldwide-contraction-of.html and earlier https://cmpassocregulationblog.blogspot.com/2020/02/decreasing-valuations-of-risk-financial.html). The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.3 percent from IQ1983 to IIIQ1986, 5.1 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IIQ1988, 4.8 percent from IQ1983 to IIIQ1988, 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989, 4.5 percent from IQ1983 to IVQ1989. 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990, 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991, 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ2019, 3.8 percent from IQ1983 to IVQ1992, 3.7 percent from IQ1983 to IQ1993, 3.6 percent from IQ1983 to IIQ1993 and at 7.9 percent from IQ1983 to IVQ1983 (https://cmpassocregulationblog.blogspot.com/2020/02/sharp-worldwide-contraction-of.html and earlier https://cmpassocregulationblog.blogspot.com/2020/02/decreasing-valuations-of-risk-financial.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IVQ2019 would have accumulated to 42.6 percent. GDP in IVQ2019 would be $22,476.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $3256.1 billion than actual $19,220.5 billion. There are more than three trillion dollars of GDP less than at trend, explaining the 20.0 million unemployed or underemployed equivalent to actual unemployment/underemployment of 11.6 percent of the effective labor force (https://cmpassocregulationblog.blogspot.com/2020/03/stress-of-world-financial-markets-fomc.html and earlier https://cmpassocregulationblog.blogspot.com/2020/02/increasing-valuations-of-risk-financial.html). US GDP in IVQ2019 is 14.5 percent lower than at trend. US GDP grew from $15,762.0 billion in IVQ2007 in constant dollars to $19,220.5 billion in IVQ2019 or 21.9 percent at the average annual equivalent rate of 1.7 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 3.1 percent per year from Feb 1919 to Feb 2020. Growth at 3.1 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 157.0135 in Feb 2020. The actual index NSA in Feb 2020 is 104.0275 which is 33.7 percent below trend. Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 160.7597 in Feb 2020. The actual index NSA in Feb 2020 is 104.0275, which is 35.3 percent below trend. Manufacturing output grew at average 1.9 percent between Dec 1986 and Feb 2020. Using trend growth of 1.9 percent per year, the index would increase to 136.1683 in Feb 2020. The output of manufacturing at 104.0275 in Feb 2020 is 23.6 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 110.5147 in Jun 2007 to the low of 86.3800 in Apr 2009 or 21.8 percent. The NAICS manufacturing index increased from 86.3800 in Apr 2009 to 105.4971 in Feb 2020 or 22.1 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 106.6777 in Dec 2007 to 162.1242 in Feb 2020. The NAICS index at 105.4971 in Feb 2020 is 34.9 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 106.6777 in Dec 2007 to 130.9620 in Feb 2020. The NAICS index at 105.4971 in Feb 2020 is 19.4 percent below trend under this alternative calculation.

Table I-2, US, Monthly and 12-Month Rates of Growth of Manufacturing ∆%

Month SA ∆%

12-Month NSA ∆%

Feb 2020

0.1

-0.2

Jan

-0.2

-1.0

Dec 2019

0.1

-1.2

Nov

0.9

-0.9

Oct

-0.6

-1.7

Sep

-0.6

-1.2

Aug

0.6

-0.5

Jul

-0.4

-0.7

Jun

0.6

0.1

May

0.1

0.2

Apr

-0.9

-0.8

Mar

-0.1

0.8

Feb

-0.5

0.9

Jan

-0.6

2.3

Dec 2018

0.6

2.2

Nov

0.2

1.7

Oct

-0.1

1.9

Sep

0.0

3.5

Aug

0.4

3.3

Jul

0.4

2.5

Jun

0.7

1.8

May

-0.8

1.3

Apr

0.4

3.3

Mar

0.0

2.5

Feb

1.1

2.4

Jan

-0.4

1.3

Dec 2017

-0.1

2.3

Nov

0.3

2.7

Oct

1.3

2.5

Sep

-0.2

1.4

Aug

-0.3

2.1

Jul

-0.2

2.3

Jun

0.1

2.4

May

-0.2

2.7

Apr

1.1

1.3

Mar

-0.3

1.8

Feb

-0.1

1.4

Jan

0.6

0.7

Dec 2016

0.3

0.9

Nov

0.1

0.1

Oct

0.3

-0.1

Sep

0.4

-0.1

Aug

-0.4

-1.5

Jul

0.3

-1.5

Jun

0.3

-0.9

May

0.0

-1.7

Apr

-0.4

-1.0

Mar

-0.2

-2.1

Feb

-0.6

-0.8

Jan

0.7

-0.9

Dec 2015

-0.3

-2.0

Nov

-0.3

-1.8

Oct

0.0

-0.8

Sep

-0.4

-1.7

Aug

-0.3

-0.6

Jul

0.7

-0.4

Jun

-0.4

-1.1

May

0.0

-0.2

Apr

-0.1

-0.1

Mar

0.3

0.0

Feb

-0.7

0.5

Jan

-0.4

2.0

Dec 2014

-0.3

1.6

Nov

0.8

1.8

Oct

-0.1

1.0

Sep

0.0

1.1

Aug

-0.5

1.3

Jul

0.4

2.0

Jun

0.4

1.4

May

0.3

1.3

Apr

-0.2

0.9

Mar

0.8

1.5

Feb

1.0

0.2

Jan

-1.1

-0.6

Dec 2013

0.0

0.1

Nov

0.0

1.2

Oct

0.1

1.9

Sep

0.1

1.2

Aug

0.9

1.3

Jul

-0.9

0.3

Jun

0.2

0.7

May

0.3

0.9

Apr

-0.4

1.0

Mar

-0.1

0.6

Feb

0.5

0.7

Jan

-0.3

0.8

Dec 2012

0.8

1.6

Nov

0.7

1.7

Oct

-0.4

0.7

Sep

-0.1

1.6

Aug

-0.2

2.1

Jul

-0.1

2.4

Jun

0.2

3.4

May

-0.4

3.4

Apr

0.5

3.8

Mar

-0.5

2.8

Feb

0.3

4.2

Jan

0.8

3.5

Dec 2011

0.7

3.1

Nov

-0.3

2.7

Oct

0.5

2.8

Sep

0.3

2.6

Aug

0.4

2.1

Jul

0.6

2.3

Jun

0.1

1.7

May

0.1

1.5

Apr

-0.6

2.7

Mar

0.6

4.2

Feb

0.1

4.8

Jan

0.2

4.8

Dec 2010

0.5

5.5

Nov

0.0

4.6

Oct

0.1

5.8

Sep

0.0

6.1

Aug

0.1

6.8

Jul

0.6

7.5

Jun

-0.1

9.2

May

1.4

8.9

Apr

0.8

7.2

Mar

1.2

5.1

Feb

0.0

1.7

Jan

1.1

1.6

Dec 2009

-0.2

-2.9

Nov

1.0

-5.8

Oct

0.2

-8.9

Sep

0.9

-10.4

Aug

1.1

-13.5

Jul

1.5

-15.3

Jun

-0.3

-17.9

May

-1.1

-17.9

Apr

-0.7

-18.6

Mar

-1.9

-17.8

Feb

-0.1

-16.7

Jan

-3.0

-17.0

Dec 2008

-3.5

-14.5

Nov

-2.4

-11.8

Oct

-0.6

-9.2

Sep

-3.5

-8.8

Aug

-1.2

-5.2

Jul

-1.2

-3.7

Jun

-0.7

-3.2

May

-0.5

-2.3

Apr

-1.1

-1.0

Mar

-0.3

-0.5

Feb

-0.6

1.1

Jan

-0.4

2.5

Dec 2007

0.1

2.1

Nov

0.6

3.5

Oct

-0.3

2.9

Sep

0.5

2.9

Aug

-0.3

2.7

Jul

0.1

3.6

Jun

0.3

3.1

May

-0.1

3.2

Apr

0.7

3.7

Mar

0.9

2.6

Feb

0.4

1.6

Jan

-0.5

1.2

Dec 2006

2.7

Dec 2005

3.6

Dec 2004

4.1

Dec 2003

2.3

Dec 2002

2.4

Dec 2001

-5.3

Dec 2000

0.8

Dec 1999

5.2

Average ∆% Dec 1986-Dec 2019

1.9

Average ∆% Dec 1986-Dec 2018

2.0

Average ∆% Dec 1986-Dec 2017

2.0

Average ∆% Dec 1986-Dec 2016

2.0

Average ∆% Dec 1986-Dec 2015

2.0

Average ∆% Dec 1986-Dec 2014

2.2

Average ∆% Dec 1986-Dec 2013

2.2

Average ∆% Dec 1986-Dec 1999

4.3

Average ∆% Dec 1999-Dec 2006

1.5

Average ∆% Dec 1986-Dec 2006

3.3

Average ∆% Dec 1999-Dec 2017

0.4

Average ∆% Dec 1999-Dec 2018

0.5

Average ∆% Dec 1999-Dec 2019

0.4

∆% Peak 112.3113 in 06/2007 to 103.2510 in 12/2019

-8.1

∆% Peak 112.3113 in 06/2007 to Trough 87.3028 in 4/2009

-22.3

∆% Trough 87.3028 in 04/2009 to 103.2510 in 12/2019

18.3

∆% Trough 87.3028 in 04/2009 to 104.0275 in 2/2020

19.2

∆% Peak 112.3113 in 06/2007 to 104.0275 in 2/2020

-7.4

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

https://www.federalreserve.gov/releases/g17/Revisions/Current/DefaultRev.htm

Chart I-1 of the Board of Governors of the Federal Reserve System provides industrial production, manufacturing and capacity since the 1970s. There was acceleration of growth of industrial production, manufacturing and capacity in the 1990s because of rapid growth of productivity in the US (Cobet and Wilson (2002); see Pelaez and Pelaez, The Global Recession Risk (2007), 135-44). The slopes of the curves flatten in the 2000s. Production and capacity have not recovered sufficiently above levels before the global recession, remaining like GDP below historical trend. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 3.1 percent per year from Feb 1919 to Feb 2020. Growth at 3.1 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 157.0135 in Feb 2020. The actual index NSA in Feb 2020 is 104.0275 which is 33.7 percent below trend. Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 160.7597 in Feb 2020. The actual index NSA in Feb 2020 is 104.0275, which is 35.3 percent below trend. Manufacturing output grew at average 1.9 percent between Dec 1986 and Feb 2020. Using trend growth of 1.9 percent per year, the index would increase to 136.1683 in Feb 2020. The output of manufacturing at 104.0275 in Feb 2020 is 23.6 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 110.5147 in Jun 2007 to the low of 86.3800 in Apr 2009 or 21.8 percent. The NAICS manufacturing index increased from 86.3800 in Apr 2009 to 105.4971 in Feb 2020 or 22.1 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 106.6777 in Dec 2007 to 162.1242 in Feb 2020. The NAICS index at 105.4971 in Feb 2020 is 34.9 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 106.6777 in Dec 2007 to 130.9620 in Feb 2020. The NAICS index at 105.4971 in Feb 2020 is 19.4 percent below trend under this alternative calculation.

clip_image001

Chart I-1, US, Industrial Production, Capacity and Utilization

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/ipg1.gif

Additional detail on industrial production and capacity utilization is in Chart I-2 of the Board of Governors of the Federal Reserve System. Production of consumer durable goods fell sharply during the global recession by more than 30 percent and is oscillating above the level before the contraction. Output of nondurable consumer goods fell around 10 percent and is some 5 percent below the level before the contraction. Output of business equipment fell sharply during the contraction of 2001 but began rapid growth again after 2004. An important characteristic is rapid growth of output of business equipment in the cyclical expansion after sharp contraction in the global recession, stalling in the final segment followed by recovery. Output of defense and space only suffered reduction in the rate of growth during the global recession and surged ahead of the level before the contraction, declining in the final segment. Output of construction supplies collapsed during the global recession and is well below the level before the contraction. Output of energy materials was stagnant before the contraction but recovered sharply above the level before the contraction with alternating recent decline/improvement.

clip_image002

Chart I-2, US, Industrial Production, Capacity and Utilization

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/ipg3.gif

The modern industrial revolution of Jensen (1993) is captured in Chart I-3 of the Board of Governors of the Federal Reserve System (for the literature on M&A and corporate control see Pelaez and Pelaez, Regulation of Banks and Finance (2009a), 143-56, Globalization and the State, Vol. I (2008a), 49-59, Government Intervention in Globalization (2008c), 46-49). The slope of the curve of total industrial production accelerates in the 1990s to a much higher rate of growth than the curve excluding high-technology industries. Growth rates decelerate into the 2000s and output and capacity utilization have not recovered fully from the strong impact of the global recession. Output of energy materials was stagnant before the contraction but recovered sharply above the level before the contraction with alternating recent decline/improvement followed by stability. Growth in the current cyclical expansion has been more subdued than in the prior comparably deep contractions in the 1970s and 1980s. Chart I-2 shows that the past recessions after World War II are the relevant ones for comparison with the recession after 2007 instead of common comparisons with the Great Depression (https://cmpassocregulationblog.blogspot.com/2020/02/sharp-worldwide-contraction-of.html and earlier https://cmpassocregulationblog.blogspot.com/2020/02/decreasing-valuations-of-risk-financial.html). The lower part of Chart I-3 shows recent strong growth of energy compared with non-energy.

clip_image003

Chart I-3, US, Industrial Production and Capacity Utilization, Selected Industries

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/ipg2.gif

United States manufacturing output from 1919 to 2019 monthly is in Chart I-4 of the Board of Governors of the Federal Reserve System. The second industrial revolution of Jensen (1993) is quite evident in the acceleration of the rate of growth of output given by the sharper slope in the 1980s and 1990s. Growth was robust after the shallow recession of 2001 but dropped sharply during the global recession after IVQ2007. Manufacturing output recovered sharply but has not reached earlier levels and is losing momentum at the margin. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 3.1 percent per year from Feb 1919 to Feb 2020. Growth at 3.1 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 157.0135 in Feb 2020. The actual index NSA in Feb 2020 is 104.0275 which is 33.7 percent below trend. Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 160.7597 in Feb 2020. The actual index NSA in Feb 2020 is 104.0275, which is 35.3 percent below trend. Manufacturing output grew at average 1.9 percent between Dec 1986 and Feb 2020. Using trend growth of 1.9 percent per year, the index would increase to 136.1683 in Feb 2020. The output of manufacturing at 104.0275 in Feb 2020 is 23.6 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 110.5147 in Jun 2007 to the low of 86.3800 in Apr 2009 or 21.8 percent. The NAICS manufacturing index increased from 86.3800 in Apr 2009 to 105.4971 in Feb 2020 or 22.1 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 106.6777 in Dec 2007 to 162.1242 in Feb 2020. The NAICS index at 105.4971 in Feb 2020 is 34.9 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 106.6777 in Dec 2007 to 130.9620 in Feb 2020. The NAICS index at 105.4971 in Feb 2020 is 19.4 percent below trend under this alternative calculation.

clip_image004

Chart I-4, US, Manufacturing Output, 1919-2020

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

Industrial production increased 0.6 percent in Feb 2020 and decreased 0.5 percent in Jan 2020 after decreasing 0.4 percent in Dec 2019, with all data seasonally adjusted. The Board of Governors of the Federal Reserve System conducted the annual revision of industrial production released on Mar 27, 2019 (https://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm):

“The Federal Reserve has revised its index of industrial production (IP) and the related measures of capacity and capacity utilization.[1] On net, the revisions to the growth rates for total IP for recent years were small and positive, with the estimates for 2016 and 2017 a bit higher and the estimates for 2015 and 2018 slightly lower.[2] Total IP is still reported to have increased from the end of the recession in mid-2009 through late 2014 before declining in 2015 and rebounding in mid-2016. Subsequently, the index advanced around 7 1/2 percent over 2017 and 2018.

Capacity for total industry expanded modestly in each year from 2015 to 2017 before advancing 1 1/2 percent in 2018; it is expected to advance about 2 percent in 2019. Revisions for recent years were very small and showed slightly less expansion in most years relative to earlier reports.

In the fourth quarter of 2018, capacity utilization for total industry stood at 79.4 percent, about 3/4 percentage point above its previous estimate and about 1/2 percentage point below its long-run (1972–2018) average. The utilization rate in 2017 is also higher than its previous estimate.”

The report of the Board of Governors of the Federal Reserve System states (https://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production rose 0.6 percent in February after falling 0.5 percent in January. Manufacturing output edged up 0.1 percent in February; excluding a large gain for motor vehicles and parts and a large drop for civilian aircraft, factory output was unchanged. The index for mining declined 1.5 percent, but the index for utilities jumped 7.1 percent, as temperatures returned to more typical levels following an unseasonably warm January. At 109.6 percent of its 2012 average, the level of total industrial production in February was unchanged from a year earlier. Capacity utilization for the industrial sector increased 0.4 percentage point in February to 77.0 percent, a rate that is 2.8 percentage points below its long-run (1972–2019) average.” In the six months ending in Feb 2020, United States national industrial production accumulated change of minus 0.1 percent at the annual equivalent rate of minus 0.2 percent, which is higher than growth of 0.0 percent in the 12 months ending in Feb 2020. Excluding growth of 0.9 percent in Nov 2019, growth in the remaining five months from Sep 2019 to Feb 2020 accumulated to minus 1.0 percent or minus 2.4 percent annual equivalent. Industrial production increased 0.9 percent in one of the past six months, 0.6 percent in one month, minus 0.5 percent in one month, minus 0.4 percent in two months and minus 0.3 percent in one month. Industrial production decreased at annual equivalent 1.2 percent in the most recent quarter from Dec 2019 to Feb 2020 and increased at 0.8 percent annual equivalent in the prior quarter from Sep to Nov 2019. Business equipment accumulated change of minus 3.7 percent in the six months from Sep 2019 to Feb 2020, at the annual equivalent rate of minus 7.3 percent, which is lower than growth of minus 3.7 percent in the 12 months ending in Feb 2020. The Fed analyzes capacity utilization of total industry in its report (https://www.federalreserve.gov/releases/g17/Current/default.htm): ” Capacity utilization for the industrial sector increased 0.4 percentage point in February to 77.0 percent, a rate that is 2.8 percentage points below its long-run (1972–2019) average.” United States industry apparently decelerated to a lower growth rate followed by possible acceleration and weakening growth in past months. There could be renewed growth with oscillations.

Manufacturing decreased 22.3 percent from the peak in Jun 2007 to the trough in Apr 2009 and increased 18.3 percent from the trough in Apr 2009 to Dec 2019. Manufacturing grew 19.2 percent from the trough in Apr 2009 to Feb 2020. Manufacturing in Feb 2020 is lower by 7.4 percent relative to the peak in Jun 2007. The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IVQ2019 would have accumulated to 42.6 percent. GDP in IVQ2019 would be $22,476.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $3256.1 billion than actual $19,220.5 billion. There are more than three trillion dollars of GDP less than at trend, explaining the 20.0 million unemployed or underemployed equivalent to actual unemployment/underemployment of 11.6 percent of the effective labor force (https://cmpassocregulationblog.blogspot.com/2020/03/stress-of-world-financial-markets-fomc.html and earlier https://cmpassocregulationblog.blogspot.com/2020/02/increasing-valuations-of-risk-financial.html). US GDP in IVQ2019 is 14.5 percent lower than at trend. US GDP grew from $15,762.0 billion in IVQ2007 in constant dollars to $19,220.5 billion in IVQ2019 or 21.9 percent at the average annual equivalent rate of 1.7 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 3.1 percent per year from Feb 1919 to Feb 2020. Growth at 3.1 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 157.0135 in Feb 2020. The actual index NSA in Feb 2020 is 104.0275 which is 33.7 percent below trend. Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 160.7597 in Feb 2020. The actual index NSA in Feb 2020 is 104.0275, which is 35.3 percent below trend. Manufacturing output grew at average 1.9 percent between Dec 1986 and Feb 2020. Using trend growth of 1.9 percent per year, the index would increase to 136.1683 in Feb 2020. The output of manufacturing at 104.0275 in Feb 2020 is 23.6 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 110.5147 in Jun 2007 to the low of 86.3800 in Apr 2009 or 21.8 percent. The NAICS manufacturing index increased from 86.3800 in Apr 2009 to 105.4971 in Feb 2020 or 22.1 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 106.6777 in Dec 2007 to 162.1242 in Feb 2020. The NAICS index at 105.4971 in Feb 2020 is 34.9 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 106.6777 in Dec 2007 to 130.9620 in Feb 2020. The NAICS index at 105.4971 in Feb 2020 is 19.4 percent below trend under this alternative calculation. Table I-13 provides national income by industry without capital consumption adjustment (WCCA). “Private industries” or economic activities have share of 86.8 percent in IIIQ2019. Most of US national income is in the form of services. In Feb 2020, there were 150.997 million nonfarm jobs NSA in the US, according to estimates of the establishment survey of the Bureau of Labor Statistics (BLS) (https://www.bls.gov/news.release/empsit.nr0.htm Table B-1). Total private jobs of 127.968 million NSA in Feb 2020 accounted for 84.7 percent of total nonfarm jobs of 150.997 million, of which 12.792 million, or 10.0 percent of total private jobs and 8.5 percent of total nonfarm jobs, were in manufacturing. Private service-providing jobs were 107.205 million NSA in Feb 2020, or 71.0 percent of total nonfarm jobs and 83.8 percent of total private-sector jobs. Manufacturing has share of 9.3 percent in US national income in IIIQ2019 and durable goods 5.5 percent, as shown in Table I-13. Most income in the US originates in services. Subsidies and similar measures designed to increase manufacturing jobs will not increase economic growth and employment and may actually reduce growth by diverting resources away from currently employment-creating activities because of the drain of taxation.

Table I-13, US, National Income without Capital Consumption Adjustment by Industry, Seasonally Adjusted Annual Rates, Billions of Dollars, % of Total

SAAR IIQ2019

% Total

SAAR IIIQ2019

% Total

National Income WCCA

17,747.7

100.0

17,870.2

100.0

Domestic Industries

17,446.7

98.3

17,561.2

98.3

Private Industries

15,415.7

86.9

15,505.6

86.8

Agriculture

121.6

0.7

127.3

0.7

Mining

198.4

1.1

197.9

1.1

Utilities

165.6

0.9

166.2

0.9

Construction

932.4

5.3

944.8

5.3

Manufacturing

1656.1

9.3

1665.5

9.3

Durable Goods

995.8

5.6

986.1

5.5

Nondurable Goods

660.3

3.7

679.4

3.8

Wholesale Trade

1008.2

5.7

1019.4

5.7

Retail Trade

1183.0

6.7

1192.0

6.7

Transportation & WH

575.6

3.2

588.8

3.3

Information

627.4

3.5

616.1

3.4

Finance, Insurance, RE

3135.8

17.7

3125.4

17.5

Professional & Business Services

2665.2

15.0

2685.7

15.0

Education, Health Care

1837.1

10.4

1855.3

10.4

Arts, Entertainment

785.7

4.4

793.0

4.4

Other Services

523.6

3.0

528.3

3.0

Government

2031.0

11.4

2055.6

11.5

Rest of the World

301.0

1.7

309.0

1.7

Notes: SSAR: Seasonally-Adjusted Annual Rate; Percentages Calculates from Unrounded Data; WCCA: Without Capital Consumption Adjustment by Industry; WH: Warehousing; RE, includes rental and leasing: Real Estate; Art, Entertainment includes recreation, accommodation and food services; BS: business services

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Motor vehicle sales and production in the US have been in long-term structural change. Table VA-1A provides the data on new motor vehicle sales and domestic car production in the US from 1990 to 2010. New motor vehicle sales grew from 14,137 thousand in 1990 to the peak of 17,806 thousand in 2000 or 29.5 percent. In that same period, domestic car production fell from 6,231 thousand in 1990 to 5,542 thousand in 2000 or -11.1 percent. New motor vehicle sales fell from 17,445 thousand in 2005 to 11,772 in 2010 or 32.5 percent while domestic car production fell from 4,321 thousand in 2005 to 2,840 thousand in 2010 or 34.3 percent. In IIQ2018, light vehicle sales accumulated to 4,500,220, which is higher by 1.8 percent relative to 4,419,349 a year earlier in IIQ2017 (http://www.motorintelligence.com/m_frameset.html). Total not seasonally adjusted light vehicle sales reached 1356.3 thousands in Feb 2020, increasing 8.4 percent from 1251.5 thousands in Feb 2019 (https://www.bea.gov/national/xls/gap_hist.xlsx). The seasonally adjusted annual rate of light vehicle sales in the US reached 16.8 million in Feb 2020, lower than 16.9 million in Jan 2020 and higher than 16.5 million in Feb 2019 (https://www.bea.gov/national/xls/gap_hist.xlsx).

Table VA-1A, US, New Motor Vehicle Sales and Car Production, Thousand Units 7

New Motor Vehicle Sales

New Car Sales and Leases

New Truck Sales and Leases

Domestic Car Production

1990

14,137

9,300

4,837

6,231

1991

12,725

8,589

4,136

5,454

1992

13,093

8,215

4,878

5,979

1993

14,172

8,518

5,654

5,979

1994

15,397

8,990

6,407

6,614

1995

15,106

8,536

6,470

6,340

1996

15,449

8,527

6,922

6,081

1997

15,490

8,273

7,218

5,934

1998

15,958

8,142

7,816

5,554

1999

17,401

8,697

8,704

5,638

2000

17,806

8,852

8,954

5,542

2001

17,468

8,422

9,046

4,878

2002

17,144

8,109

9,036

5,019

2003

16,968

7,611

9,357

4,510

2004

17,298

7,545

9,753

4,230

2005

17,445

7,720

9,725

4,321

2006

17,049

7,821

9,228

4,367

2007

16,460

7,618

8,683

3,924

2008

13,494

6,814

6.680

3,777

2009

10,601

5,456

5,154

2,247

2010

11,772

5,729

6,044

2,840

Source: US Census Bureau

https://www.bea.gov/national/xls/gap_hist.xlsx

Chart I-5 of the Board of Governors of the Federal Reserve provides output of motor vehicles and parts in the United States from 1972 to 2020. Output virtually stagnated since the late 1990s with recent increase.

clip_image005

Chart 1-5, US, Motor Vehicles and Parts Output, 1972-2020

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

Chart I-6 of the Board of Governors of the Federal Reserve System provides output of computers and electronic products in the United States from 1972 to 2020. Output accelerated sharply in the 1990s and 2000s and surpassed the level before the global recession beginning in IVQ2007.

clip_image006

Chart I-6, US, Output of Computers and Electronic Products, 1972-2020

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

Chart I-7 of the Board of Governors of the Federal Reserve System shows that output of durable manufacturing accelerated in the 1980s and 1990s with slower growth in the 2000s perhaps because processes matured. Growth was robust after the major drop during the global recession but appears to vacillate in the final segment.

clip_image007

Chart I-7, US, Output of Durable Manufacturing, 1972-2020

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

Chart I-8 of the Board of Governors of the Federal Reserve System provides output of aerospace and miscellaneous transportation equipment from 1972 to 2020. There is long-term upward trend with oscillations around the trend and cycles of large amplitude.

clip_image008

Chart I-8, US, Output of Aerospace and Miscellaneous Transportation Equipment, 1972-2020

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

Manufacturing is underperforming in the lost cycle of the global recession. Manufacturing (NAICS) in Feb 2020 is lower by 4.5 percent relative to the peak in Jun 2007, as shown in Chart V-3A. Manufacturing (SIC) in Feb 2020 at 104.0275 is lower by 7.4 percent relative to the peak at 112.3113 in Jun 2007. There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 3.1 percent per year from Feb 1919 to Feb 2020. Growth at 3.1 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 157.0135 in Feb 2020. The actual index NSA in Feb 2020 is 104.0275 which is 33.7 percent below trend. Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 160.7597 in Feb 2020. The actual index NSA in Feb 2020 is 104.0275, which is 35.3 percent below trend. Manufacturing output grew at average 1.9 percent between Dec 1986 and Feb 2020. Using trend growth of 1.9 percent per year, the index would increase to 136.1683 in Feb 2020. The output of manufacturing at 104.0275 in Feb 2020 is 23.6 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 110.5147 in Jun 2007 to the low of 86.3800 in Apr 2009 or 21.8 percent. The NAICS manufacturing index increased from 86.3800 in Apr 2009 to 105.4971 in Feb 2020 or 22.1 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 106.6777 in Dec 2007 to 162.1242 in Feb 2020. The NAICS index at 105.4971 in Feb 2020 is 34.9 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 106.6777 in Dec 2007 to 130.9620 in Feb 2020. The NAICS index at 105.4971 in Feb 2020 is 19.4 percent below trend under this alternative calculation.

clip_image009

Chart V-3A, United States Manufacturing NSA, Dec 2007 to Feb 2020

Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

clip_image010

Chart V-3A, United States Manufacturing (NAICS) NSA, Jun 2007 to Feb 2020

Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

Chart V-3B provides the civilian noninstitutional population of the United States, or those available for work. The civilian noninstitutional population increased from 231.713 million in Jun 2007 to 259.628 million in Feb 2020 or 27.915 million.

clip_image011

Chart V-3B, United States, Civilian Noninstitutional Population, Million, NSA, Jan 2007 to Feb 2020

Source: US Bureau of Labor Statistics

https://www.bls.gov/

Chart V-3C provides nonfarm payroll manufacturing jobs in the United States from Jan 2007 to Feb 2020. Nonfarm payroll manufacturing jobs fell from 13.987 million in Jun 2007 to 12.792 million in Feb 2020, or 1.195 million.

clip_image012

Chart V-3C, United States, Payroll Manufacturing Jobs, NSA, Jan 2007 to Feb 2020, Thousands

Source: US Bureau of Labor Statistics

https://www.bls.gov

Chart V-3D provides the index of US manufacturing (NAICS) from Jan 1972 to Feb 2020. The index continued increasing during the decline of manufacturing jobs after the early 1980s. There are likely effects of changes in the composition of manufacturing with also changes in productivity and trade.

clip_image013

Chart V-3D, United States Manufacturing (NAICS) NSA, Jan 1972 to Feb 2020

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

Chart V-3E provides the US noninstitutional civilian population, or those in condition of working, from Jan 1948, when first available, to Feb 2020. The noninstitutional civilian population increased from 170.168 million in Jun 1981 to 259.628 million in Feb 2020, or 89.460 million.

clip_image014

Chart V-3E, United States, Civilian Noninstitutional Population, Million, NSA, Jan 1948 to Jan 2020

Source: US Bureau of Labor Statistics

https://www.bls.gov/

Chart V-3F provides manufacturing jobs in the United States from Jan 1939 to Feb 2020. Nonfarm payroll manufacturing jobs decreased from a peak of 18.890 million in Jun 1981 to 12.792 million in Feb 2020.

clip_image015

Chart V-3C, United States, Payroll Manufacturing Jobs, NSA, Jan 1939 to Feb 2020, Thousands

Source: US Bureau of Labor Statistics

https://www.bls.gov

The Empire State Manufacturing Survey Index in Table VA-1 provides continuing deterioration that started in Jun 2012 well before Hurricane Sandy in Oct 2012. The current general index has been in negative contraction territory from minus 2.7 in Aug 2012 to minus 7.5 in Jan 2013 and minus 1.1 in May 2013. The current general index changed to minus 21.5 in Mar 2020. The index of current orders has also been in negative contraction territory from minus 3.0 in Aug 2012 to minus 10.9 in Jan 2013 and minus 7.8 in Jun 2013. The index of current new orders changed to minus 9.3 in Mar 2020. There is softening in the general index for the next six months at 1.2 in Mar 2020 and new orders at 17.6.

Table VA-1, US, New York Federal Reserve Bank Empire State Manufacturing Survey Index SA

Current General Index

Current New Orders

Future General Index

Future New Orders

9/30/2011

-4.3

-4.5

22.5

23.5

10/31/2011

-5.7

1.7

14.5

19.4

11/30/2011

4.9

1.6

35.4

30.3

12/31/2011

11.7

10.1

45.4

43.2

1/31/2012

11.5

8.7

50.7

44.4

2/29/2012

17.5

7.1

46.3

37.6

3/31/2012

15.5

4.4

43.8

37.8

4/30/2012

7.8

4.1

40.5

38.4

5/31/2012

14.2

7.1

32.5

32

6/30/2012

1.6

3

27.9

28.4

7/31/2012

3.2

-3.3

24.4

21.8

8/31/2012

-2.7

-3

18.6

14.6

9/30/2012

-6.9

-10.3

27

28

10/31/2012

-4.6

-6.6

20.1

22.3

11/30/2012

-0.8

6.1

18.1

15.1

12/31/2012

-5.8

0.3

18.9

18.8

1/31/2013

-7.5

-10.9

21.7

23.7

2/28/2013

9.2

12.4

32

26.8

3/31/2013

4.9

4.7

34.7

33

4/30/2013

4.5

2.8

30.7

35.8

5/31/2013

-1.1

-3.1

26.6

30.3

6/30/2013

4.5

-7.8

27.8

22.4

7/31/2013

5.2

2.3

34.1

33.3

8/31/2013

9.7

2.8

35.7

30.8

9/30/2013

7.7

2.9

40.3

38.2

10/31/2013

3.6

9.5

41.3

36.9

11/30/2013

2.2

-2.5

38.1

39.4

12/31/2013

3.2

1.1

36.4

27.5

1/31/2014

12.8

8.1

35.8

37.5

2/28/2014

6.8

1.9

39.8

43.5

3/31/2014

2.8

0.8

34.6

36.4

4/30/2014

4.1

-0.4

39.1

35.2

5/31/2014

17.5

8.6

43.6

38.6

6/30/2014

15.8

13.1

41.2

44.3

7/31/2014

21

16.5

30.7

27.4

8/31/2014

16.1

15.6

45.5

50.2

9/30/2014

29.4

17.3

47

46.1

10/31/2014

6.2

1.8

42.3

42.2

11/30/2014

12

10.3

47.7

47.6

12/31/2014

-2.5

0.4

35.3

35.2

1/31/2015

12.5

6.9

46.6

41

2/28/2015

10.6

3.1

26.9

28.7

3/31/2015

3.7

-6.3

30.1

26.1

4/30/2015

0.1

-4.7

38.4

35.2

5/31/2015

3.9

3.7

31.2

35

6/30/2015

-4.8

-6.9

25.9

27

7/31/2015

1.7

-5

29.4

33.3

8/31/2015

-13.9

-14.6

32.4

30.5

9/30/2015

-12.7

-11.9

24.3

24.8

10/31/2015

-13.7

-15.3

22.8

22.9

11/30/2015

-9.7

-11.4

22.3

19.4

12/31/2015

-5.9

-6.1

33.1

23.7

1/31/2016

-16.6

-20.6

12.1

15.3

2/29/2016

-12.9

-10

13.6

19.5

3/31/2016

-2.5

3

24.2

36.8

4/30/2016

8.9

10.7

32

39.1

5/31/2016

-7.4

-2.8

29.2

24

6/30/2016

3.1

6.6

33.1

37.6

7/31/2016

1.4

-1.5

31

30.9

8/31/2016

-5.6

0.7

24.5

28.4

9/30/2016

-1.6

-6.4

35.8

33.5

10/31/2016

-9.5

-2.8

36.1

38.1

11/30/2016

1.9

2.9

29.9

26.8

12/31/2016

9.6

9.3

47.2

45

1/31/2017

7.5

6.8

49.5

40.3

2/28/2017

20.1

13.5

39.2

39.6

3/31/2017

15.6

17

36.4

33.9

4/30/2017

6.2

9.9

43.2

36.1

5/31/2017

0.7

-2.2

40.8

35.6

6/30/2017

18.8

16.1

41.3

42

7/31/2017

11.8

13.8

36.6

34.9

8/31/2017

22.7

20

43.3

40.9

9/30/2017

23.6

23.7

42.5

44.9

10/31/2017

26.6

19.4

45.8

45

11/30/2017

19.1

18.2

48.9

50.5

12/31/2017

20.1

17

43.7

39.4

1/31/2018

19.4

16.6

49.1

48.5

2/28/2018

17.5

14.9

48.4

45.4

3/31/2018

23.5

16.1

43.1

42.8

4/30/2018

17.4

11.7

23.5

22.8

5/31/2018

17

15.9

32.2

34.9

6/30/2018

25.8

21.5

38.5

35.5

7/31/2018

21.6

19.2

31

36.1

8/31/2018

24.1

15.8

33.8

35.6

9/30/2018

19

16.1

32.6

35.5

10/31/2018

19.4

20.5

30.3

35.6

11/30/2018

21.1

16.6

32.7

37

12/31/2018

11.1

12.4

27.1

30.3

1/31/2019

4.8

6.3

21.2

21.7

2/28/2019

10.3

8.1

30.9

34.4

3/31/2019

5.1

3.6

27.9

29

4/30/2019

9.4

7.4

17.4

24.3

5/31/2019

14.4

8.2

29.7

33

6/30/2019

-6.4

-9.7

25.5

28.4

7/31/2019

4.2

-0.4

29.3

34.2

8/31/2019

4.2

5.6

25.1

31.1

9/30/2019

2.2

1.9

15.5

23.4

10/31/2019

3.3

3.7

17.8

24

11/30/2019

2.5

3.1

19.8

25.2

12/31/2019

3.3

1.7

26.1

30.8

1/31/2020

4.8

6.6

23.6

31.4

2/29/2020

12.9

22.1

22.9

27.5

3/31/2020

-21.5

-9.3

1.2

17.6

Source: Federal Reserve Bank of New York

https://www.newyorkfed.org/survey/empire/empiresurvey_overview.html

Chart VA-1 of the Federal Reserve Bank of New York provides indexes of current and expected economic activity. There were multiple contractions in current activity after the global recession shown in shade. Current activity is weakening relative to strong recovery in the initial expansion in 2010 and 2011 with recent oscillating recovery and weakness. There is sharp deterioration in Mar 2020.

clip_image017

Chart VA-1, US, US, Federal Reserve Bank of New York, Diffusion Index of Current and Expected Activity, Seasonally Adjusted

Source: Federal Reserve Bank of New York

https://www.newyorkfed.org/survey/empire/empiresurvey_overview.html

Table VA-2 shows improvement after prior deterioration followed by current soft improvement of the Business Outlook survey of the Federal Reserve Bank of Philadelphia. The general index moved out of contraction of 5.3 in Feb 2013 to deeper contraction at 12.7 in Mar 2020. New orders moved from 0.6 in Feb 2013 to deeper contraction at 15.5 in Mar 2020. There is expansion in the future general index at 35.2 in Mar 2020 and in future new orders at 36.7 in Mar 2020.

Table VA-2, US, Federal Reserve Bank of Philadelphia Business Outlook Survey, SA

Current General Index

Current New Orders

Future General Index

Future New Orders

Jan-11

16.5

20.1

43.8

35.9

Feb-11

28.9

19.8

41.9

38.7

Mar-11

36.4

34.1

57.0

55.5

Apr-11

13.0

13.7

35.7

30.9

May-11

6.2

8.3

26.2

25.3

Jun-11

-0.5

-5.2

8.5

8.6

Jul-11

7.1

4.1

28.6

32.2

Aug-11

-19.5

-17.5

12.6

26.6

Sep-11

-10.7

-5.6

18.1

19.6

Oct-11

6.2

5.9

26.1

28.6

Nov-11

4.0

1.5

36.4

36.2

Dec-11

2.4

4.4

33.7

38.6

Jan-12

7.5

10.7

43.4

43.5

Feb-12

10.4

11.6

30.3

32.2

Mar-12

8.8

-0.1

30.4

37.1

Apr-12

5.7

0.6

39.9

42.4

May-12

-0.8

2.3

24.9

35.5

Jun-12

-12.6

-17.8

25.4

34.3

Jul-12

-12.7

-3.6

21.5

25.6

Aug-12

-2.6

1.6

20

25.5

Sep-12

0.2

0.7

31.6

42.8

Oct-12

-1.1

-4.7

17.1

20.7

Nov-12

-10.6

-7.4

16.6

22.6

Dec-12

2.4

2.6

22.4

29

Jan-13

-1.4

-2

28.8

31.9

Feb-13

-5.3

0.6

32

39

Mar-13

2

0.1

35.5

38.1

Apr-13

0.4

0.7

30.6

34.4

May-13

0.2

-4

39.5

42.2

Jun-13

12.7

11.7

37.2

40

Jul-13

15.9

7.4

41.6

52.4

Aug-13

8.2

8.9

38.5

38.8

Sep-13

20.6

19.3

48.8

51.5

Oct-13

13.5

23.1

55.4

61.2

Nov-13

4.6

8.8

42

46

Dec-13

3.8

12

41.1

44.6

Jan-14

15.2

7.9

38

40.8

Feb-14

2.3

4.7

43.9

39.5

Mar-14

12.5

6.5

42.4

38.7

Apr-14

17

17.3

39.3

38.6

May-14

18.5

14.8

43.8

42.5

Jun-14

14.1

10.4

53.3

55.3

Jul-14

21.4

28.7

53.6

48.8

Aug-14

22.9

15.4

61.9

51.3

Sep-14

21.7

13.8

46.1

44.8

Oct-14

18.1

16.8

50.8

49

Nov-14

35.5

29.7

50.1

44.3

Dec-14

21.6

14.5

47.2

43.9

Jan-15

13.2

10.1

54

47

Feb-15

10.5

8.4

35

46.1

Mar-15

7.3

0.8

37.7

37.8

Apr-15

9.9

4.5

39.7

33.6

May-15

6.1

5.4

38.1

35.1

Jun-15

8.2

11.2

43.4

47.5

Jul-15

4.4

2.3

40.2

45.4

Aug-15

5.8

6.6

34.9

39.2

Sep-15

-3.8

10.5

36.8

41.7

Oct-15

-4.9

-6.4

34.8

36.4

Nov-15

-3.8

-7.6

37.5

44.3

Dec-15

-9

-8.9

18.6

29.7

Jan-16

-4

-3

18.3

21.3

Feb-16

-6.8

-6

15.8

20

Mar-16

9

5.5

26.9

35.6

Apr-16

-1

-0.5

39.9

43.6

May-16

-4.8

-1.7

39.7

40.3

Jun-16

4.4

-0.9

36.6

37.6

Jul-16

0.9

10.1

36

35.2

Aug-16

5.4

-1.5

41.9

42.8

Sep-16

12.1

2.8

37

38.3

Oct-16

10.5

19.4

36.2

40.2

Nov-16

9.4

19.4

29.8

35.1

Dec-16

22.6

15.5

45.5

44.8

Jan-17

24.8

24.9

54.7

52.3

Feb-17

39.7

35.1

50.3

49.2

Mar-17

32

31.4

56.4

59.1

Apr-17

23.7

28.5

46.2

55.5

May-17

34.3

25.2

40.2

49.5

Jun-17

28.2

27.3

38.3

39.6

Jul-17

20.4

5.3

38.5

44.6

Aug-17

20.7

22.9

42.4

50.2

Sep-17

24

26.7

54.1

58.6

Oct-17

27.2

21

46.4

43.6

Nov-17

23.1

26.5

47.9

49.1

Dec-17

29.3

29.3

50

54.6

Jan-18

23

9.6

45.4

48.2

Feb-18

30.7

29.5

40.1

49.7

Mar-18

23.8

30.3

46.8

50.2

Apr-18

25.3

22.2

43

41.1

May-18

32.2

41.3

41.5

43.7

Jun-18

21.7

21.2

38.3

41.2

Jul-18

20.8

24.9

26.8

29.8

Aug-18

10.1

12.1

36.8

36.8

Sep-18

21.3

18.5

36

35.9

Oct-18

20.5

15.5

31.9

39

Nov-18

10.6

12.2

26.4

39.1

Dec-18

10.9

14.8

29.1

36.3

Jan-19

14.8

16.7

29.7

31.8

Feb-19

-0.7

1.5

29

30.5

Mar-19

14.9

6.4

23.1

24.2

Apr-19

11

16

22.2

27

May-19

17.5

14.2

22.3

24.8

Jun-19

1.5

8

24.2

33.7

Jul-19

16.6

18.4

33.6

41.6

Aug-19

13.1

21.6

31.8

42

Sep-19

12.2

22.5

23.1

34.4

Oct-19

6.8

22.5

32.6

37.3

Nov-19

8.4

10.1

34.4

37.3

Dec-19

2.4

11.1

34.8

33.6

Jan-20

17

18.2

38.4

41.9

Feb-20

36.7

33.6

45.4

54

Mar-20

-12.7

-15.5

35.2

36.7

Source: Federal Reserve Bank of Philadelphia

https://www.philadelphiafed.org

Chart VA-2 of the Federal Reserve Bank of Philadelphia Manufacturing Business Outlook Survey provides the current and future general activity indexes from Jan 2007 to Jul 2019. The shaded areas are the recession cycle dates of the National Bureau of Economic Research (NBER) (http://www.nber.org/cycles.html). The Philadelphia Fed index dropped during the initial period of recession and then led the recovery, as industry overall. There was a second decline of the index into 2011 followed now by what appeared as renewed strength from late 2011 into Jan 2012. There is decline to negative territory of the current activity index in Nov 2012 and return to positive territory in Dec 2012 with decline of current conditions into contraction in Jan-Feb 2013 and rebound to mild expansion in Mar-Apr 2013. The index of current activity moved into expansion in Jun-Oct 2013 with weakness in Nov-Dec 2013, improving in Jan 2014. There is renewed deterioration in Feb 2014 with rebound in Apr-Sep 2014 and mild deterioration in Oct 2014 followed by improvement in Nov 2014. The index deteriorated in Jan-Feb 2015, stabilizing in Mar-May 2015 and improving in Jun 2015. The index deteriorated in Jul 2015, improved in Aug 2015 and deteriorated in Sep-Oct 2015. The index shows contraction in Nov 2015 to Feb 2016 with recovery in Mar 2016. There is deterioration in Apr-May 2016 with improvement in Jun 2016 and deterioration in Jul 2016. There is improvement in Aug-Sep 2016 with moderate weakening in Oct-Nov 2016. The indexes improved sharply in Dec 2016 and Jan-Feb 2017, softening in Mar-Apr 2017. The current index weakened in Jun 2017 with stability in the six-month forecast. The current index deteriorated in Jul 2017 with improvement in the six-month forecast. The current index deteriorated in Aug 2017 with improvement in the six-month forecast. The current index improved in Sep 2017 with improvement in the six-month forecast. The current index improved and the future index deteriorated in Oct 2017. There is deterioration in Nov 2017 of the current index and improvement of the future index. Both the current and future indexes improved in Dec 2017, deteriorating in Jan 2018. There is improvement of the current index in Feb 2018 with mild deterioration in the future index. The current index improves in Apr 2018 while the future index weakens. There is improvement in the current index in May 2018 with weakening of the future index. There is weakening in the current index in Jun 2018 while the future index weakens. The current index improves in Jul 2018 while the future index weakens. There is weakening of the current index in Aug 2018 while the future index improves. The current index improves in Sep 2018 while the future index weakens. The current index weakens in Oct 2018 while the future index weakens. The current index deteriorates in Nov 2018 while the future index deteriorates. The current index deteriorates in Dec 2018 while the future index improves. The current index improves in Jan 2019 while the future index improves. The current index deteriorates in Feb 2019 while the future index improves. The current index improves in Mar 2019 while the future index deteriorates. The current index deteriorates in Apr 2019 while the future index deteriorates. The current index improves in May 2019 while the future index improves. The current index deteriorates in Jun 2019 while the future index improves. The current index improves in Jul 2019 while the future index improves. The current index deteriorates in Aug 2019 while the future index deteriorates. The current index deteriorates in Sep 2019 while the future index deteriorates. The current index deteriorates in Oct 2019 while the future index improves. The current index improves in Nov 2019 while the future index improves. The current index deteriorates in Dec 2019 while the future index deteriorates. The current index improves in Jan 2020 while the future index improves. The current index improves in Feb 2020 while the future index improves. The current index contracts in Mar 2020 while the future index deteriorates.

clip_image018

Chart VA-2, Federal Reserve Bank of Philadelphia Business Outlook Survey, Current and Future Activity Indexes

Source: Federal Reserve Bank of Philadelphia

https://www.philadelphiafed.org/

The index of current new orders of the Business Outlook Survey of the Federal Reserve Bank of Philadelphia in Chart VA-2 illustrates the weakness of the cyclical expansion. The index weakened in 2006 and 2007 and then fell sharply into contraction during the global recession. There have been twelve readings into contraction from Jan 2012 to May 2013 and generally weak readings with some exceptions. The index of new orders moved into expansion in Jun-Oct 2013 with moderation in Nov-Dec 2013 and into Jan 2014. The index fell into contraction in Feb 2014, recovering in Mar-Apr 2014 but weaker reading in May 2014. There is marked improvement in Jun-Jul 2014 with slowing in Aug-Oct 2014 followed by acceleration in Nov 2014. New orders deteriorated in Jan-Apr 2015, improving in May-Jun 2015. New orders deteriorated in Jul-Aug 2015 and improved in Sep 2015. New orders deteriorated in Oct-2015 to Dec 2015, contracting at slower pace in Jan 2016. There is sharper contraction in Feb 2016 and an upward jump in Mar 2016 followed by deterioration in Apr-Jun 2016. New orders improved in Jul 2016, deteriorating in Aug 2016 and improving in Sep 2016. Improvement continued in Oct-Nov 2016 with mild deterioration in Dec 2016 followed by improvement in Jan-Feb 2017, softening in Mar-Jul 2017, recovering in Aug-Sep 2017. There is deterioration in Oct 2017 followed by improvement in Nov-Dec 2017. There is deterioration in Jan 2018 followed by improvement in Feb 2018 and improvement in Mar 2018. The index deteriorates in Apr 2018, improving in May 2018. The index deteriorates in Jun 2018, improving in Jul 2018 and deteriorating in Aug 2018. The index improves in Sep 2018, deteriorating in Oct 2018. The index weakens in Nov 2018, improving in Dec 2018. The index improves in Jan 2019, deteriorating in Feb 2019. The index improves in Mar 2019, improving in Apr 2019. The index deteriorates in May-Jun 2019, improving in Jul 2019. The index improves in Aug 2019, improving in Sep 2019. The index stabilizes in Oct 2019, deteriorating in Nov 2019. The index improves in Dec 2019 and Jan 2020. The index improves in Feb 2020. The index contracts in Mar 2020.

clip_image019

Chart VA-3, Federal Reserve Bank of Philadelphia Business Outlook Survey, Current New Orders Diffusion Index SA

Source: Federal Reserve Bank of Philadelphia

https://www.philadelphiafed.org/

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020.

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