CMP Associates Regulation Blog

Federal Open Market Committee Leaves Fed Funds Rate at 0 to ¼ Percent Per Year Probably Until 2023, Stable US Dollar With Revaluing Yuan, Growth of US Manufacturing at 1.0 Percent in Aug 2020, US Manufacturing 7.0 Lower Than A Year Earlier In the Global Recession, with Output in the US Reaching a High in Feb 2020 (https://www.nber.org/cycles.html), in the Lockdown of Economic Activity in the COVID-19 Event, US Manufacturing Underperforming Below Trend in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide, Squeeze of Economic Activity by Carry Trades Induced by Zero Interest Rates, Continuing Recovery of US Economic Indicators, World Cyclical Slow Growth, and Government Intervention in Globalization: Part I

Carlos M. Pelaez

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

I United States Industrial Production. Industrial production increased 0.4 percent in Aug 2020 and increased 3.5 percent in Jul 2020 after increasing 6.1 percent in Jun 2020, 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 0.4 percent in August for its fourth consecutive monthly increase. However, even after the recent gains, the index in August was 7.3 percent below its pre-pandemic February level. Manufacturing output continued to improve in August, rising 1.0 percent, but the gains for most manufacturing industries have gradually slowed since June. Mining production fell 2.5 percent in August, as Tropical Storm Marco and Hurricane Laura caused sharp but temporary drops in oil and gas extraction and well drilling. The output of utilities moved down 0.4 percent. At 101.4 percent of its 2012 average, the level of total industrial production was 7.7 percent lower in August than it was a year earlier. Capacity utilization for the industrial sector increased 0.3 percentage point in August to 71.4 percent, a rate that is 8.4 percentage points below its long-run (1972–2019) average but 7.3 percentage points above its low in April.” In the six months ending in Aug 2020, United States national industrial production accumulated change of minus 7.3 percent at the annual equivalent rate of minus 14.0 percent, which is lower than growth of minus 7.7 percent in the 12 months ending in Aug 2020. Excluding decline of 4.4 percent in Mar 2019, growth in the remaining five months from Mar 2019 to Aug 2020 accumulated to minus 3.0 percent or minus 7.1 percent annual equivalent. Industrial production increased 6.1 percent in one of the past six months, 3.5 percent in one month, 1.0 percent in one month, 0.4 percent in one month, minus 12.9 percent in one month and minus 4.4 percent in one month. Industrial production increased at annual equivalent 47.8 percent in the most recent quarter from Jun 2020 to Aug 2020 and decreased at 50.0 percent annual equivalent in the prior quarter from Mar 2020 to May 2020. Business equipment accumulated change of minus 8.0 percent in the six months from Mar 2020 to Aug 2020, at the annual equivalent rate of minus 15.4 percent, which is lower than growth of minus 11.3 percent in the 12 months ending in Aug 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 2.1 percentage points in July to 70.6 percent, a rate that is 9.2 percentage points below its long-run (1972–2019) average but 6.4 percentage points above its low in April.” United States industry apparently decelerated to a lower growth rate followed by possible acceleration, weakening growth in past months and deep contraction in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. There is recent and current recovery.

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

	Aug 20	Jul 20	Jun 20	May 20	Apr 20	Mar 20	Aug 20/ Aug 19
Total	0.4	3.5	6.1	1.0	-12.9	-4.4	-7.7
Market Groups
Final Products	0.7	5.1	8.5	4.5	-15.4	-5.8	-5.0
Consumer Goods	0.3	5.0	8.4	4.2	-12.9	-5.5	-1.8
Business Equipment	1.9	6.6	11.8	7.2	-23.2	-8.0	-11.3
Non Industrial Supplies	1.2	1.8	3.3	2.2	-12.3	-4.8	-8.2
Construction	1.2	0.8	2.3	3.5	-12.9	-3.8	-7.0
Materials	-0.2	2.7	5.0	-2.2	-11.0	-3.0	-10.0
Industry Groups
Manufacturing	1.0	3.9	7.5	3.9	-16.1	-5.0	-6.9
Mining	-2.5	1.4	3.0	-11.1	-7.3	-1.7	-17.9
Utilities	-0.4	3.8	1.3	-0.5	1.9	-3.1	0.5
Capacity	71.4	71.1	68.7	64.7	64.1	73.6	0.6

Sources: Board of Governors of the Federal Reserve System

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

Manufacturing increased 1.0 percent in Aug 2020 and increased 3.9 percent in Jul 2020 after increasing 7.5 percent in Jun 2020, seasonally adjusted, decreasing 7.0 percent not seasonally adjusted in the 12 months ending in Aug 2020, as shown in Table I-2. Manufacturing changed cumulatively minus 6.6 percent in the six months ending in Aug 2020 or at the annual equivalent rate of minus 12.7 percent. Excluding the change of minus 5.0 percent in Mar 2020, manufacturing decreased 1.7 percent from Mar 2020 to Aug 2020 or at the annual equivalent rate of minus 3.9 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):

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 increased 13.7 percent from the trough in Apr 2009 to Aug 2020. Manufacturing in Aug 2020 is lower by 11.6 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 1.2 percent on average in the cyclical expansion in the 44 quarters from IIIQ2009 to IIQ2020 and in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. 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 IIQ2020 (https://www.bea.gov/sites/default/files/2020-08/gdp2q20_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/2020/08/d-ollar-devaluation-and-yuan.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/contraction-of-united-states-gdp-at-32_57.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, 3.6 percent from IQ1983 to IIIQ1993, 3.7 percent from IQ1983 to IVQ1993 and at 7.9 percent from IQ1983 to IVQ1983 (https://cmpassocregulationblog.blogspot.com/2020/08/d-ollar-devaluation-and-yuan.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/contraction-of-united-states-gdp-at-32_57.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 IIQ2020 and in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event would have accumulated to 44.7 percent. GDP in IIQ2020 would be $22,807.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $5525.4 billion than actual $17,282.2 billion. There are more than five trillion dollars of GDP less than at trend, explaining the 34.8 million unemployed or underemployed equivalent to actual unemployment/underemployment of 20.2 percent of the effective labor force with the largest part originating in the global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event (https://cmpassocregulationblog.blogspot.com/2020/09/exchange-rate-fluctuations-1.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/thirty-eight-million-unemployed-or.html). Unemployment is decreasing while employment is increasing in initial adjustment of the lockdown of economic activity in the global recession resulting from the COVID-19 event (https://www.bls.gov/cps/employment-situation-covid19-faq-june-2020.pdf). US GDP in IIQ2020 is 24.2 percent lower than at trend. US GDP grew from $15,762.0 billion in IVQ2007 in constant dollars to $17,282.5 billion in IIQ2020 or 9.6 percent at the average annual equivalent rate of 0.7 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 2.9 percent per year from Aug 1919 to Aug 2020. Growth at 2.9 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 155.5554 in Aug 2020. The actual index NSA in Aug 2020 is 99.2841 which is 36.2 percent below trend. The underperformance of manufacturing in Mar-Aug 2020 originates partly in the earlier global recession augmented by the current global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19. 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 163.3909 in Aug 2020. The actual index NSA in Aug 2020 is 99.2841, which is 39.2 percent below trend. Manufacturing output grew at average 1.7 percent between Dec 1986 and Aug 2020. Using trend growth of 1.7 percent per year, the index would increase to 134.0774 in Aug 2020. The output of manufacturing at 99.2841 in Aug 2020 is 26.0 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 100.4257 in Aug 2020 or 16.3 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 164.9372 in Aug 2020. The NAICS index at 100.4257 in Aug 2020 is 39.1 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 132.0705 in Aug 2020. The NAICS index at 100.4257 in Aug 2020 is 24.0 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 ∆%
Aug 2020	1.0	-7.0
Jul	3.9	-7.6
Jun	7.5	-11.1
May	3.9	-16.8
Apr	-16.1	-20.6
Mar	-5.0	-5.4
Feb	0.0	-0.2
Jan	-0.1	-0.8
Dec 2019	0.2	-1.1
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 103.3123 in 12/2019		-8.0
∆% Peak 112.3113 in 06/2007 to Trough 87.3028 in 4/2009		-22.3
∆% Trough 87.3028 in 04/2009 to 103.3123 in 12/2019		18.3
∆% Trough 87.3028 in 04/2009 to 99.2481 in 8/2020		13.7
∆% Peak 112.3113 in 06/2007 to 99.2481 in 8/2020		-11.6

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. The final data point for Aug 2019. There is sharp contraction of output in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event followed by continuing recovery. 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 2.9 percent per year from Aug 1919 to Aug 2020. Growth at 2.9 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 155.5554 in Aug 2020. The actual index NSA in Aug 2020 is 99.2841 which is 36.2 percent below trend. The underperformance of manufacturing in Mar-Aug 2020 originates partly in the earlier global recession augmented by the current global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19. 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 163.3909 in Aug 2020. The actual index NSA in Aug 2020 is 99.2841, which is 39.2 percent below trend. Manufacturing output grew at average 1.7 percent between Dec 1986 and Aug 2020. Using trend growth of 1.7 percent per year, the index would increase to 134.0774 in Aug 2020. The output of manufacturing at 99.2841 in Aug 2020 is 26.0 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 100.4257 in Aug 2020 or 16.3 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 164.9372 in Aug 2020. The NAICS index at 100.4257 in Aug 2020 is 39.1 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 132.0705 in Aug 2020. The NAICS index at 100.4257 in Aug 2020 is 24.0 percent below trend under this alternative calculation.

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. There are deep contractions in Mar-Apr 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event with recovery beginning in May-Aug 2020.

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/2020/08/d-ollar-devaluation-and-yuan.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/contraction-of-united-states-gdp-at-32_57.html). The lower part of Chart I-3 shows recent strong growth of energy compared with non-energy. There are deep contractions in Mar-Apr 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event with recovery beginning in May-Aug 2020.

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 2020 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 2.9 percent per year from Aug 1919 to Aug 2020. Growth at 2.9 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 155.5554 in Aug 2020. The actual index NSA in Aug 2020 is 99.2841 which is 36.2 percent below trend. The underperformance of manufacturing in Mar-Aug 2020 originates partly in the earlier global recession augmented by the current global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19. 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 163.3909 in Aug 2020. The actual index NSA in Aug 2020 is 99.2841, which is 39.2 percent below trend. Manufacturing output grew at average 1.7 percent between Dec 1986 and Aug 2020. Using trend growth of 1.7 percent per year, the index would increase to 134.0774 in Aug 2020. The output of manufacturing at 99.2841 in Aug 2020 is 26.0 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 100.4257 in Aug 2020 or 16.3 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 164.9372 in Aug 2020. The NAICS index at 100.4257 in Aug 2020 is 39.1 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 132.0705 in Aug 2020. The NAICS index at 100.4257 in Aug 2020 is 24.0 percent below trend under this alternative calculation.

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 0.4 percent in Aug 2020 and increased 3.5 percent in Jul 2020 after increasing 6.1 percent in Jun 2020, 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 report of the Board of Governors of the Federal Reserve System states (https://www.federalreserve.gov/releases/g17/current/default.htm):

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

	SAAR IQ2020	% Total	SAAR IIQ2020	% Total
National Income WCCA	18,092.3	100.0	15,769.0	100.0
Domestic Industries	17,849.1	98.7	15,638.6	99.2
Private Industries	15,767.2	87.1	13,648.5	86.6
Agriculture	147.5	0.8
Mining	155.5	0.9
Utilities	204.1	1.1
Construction	954.2	5.3
Manufacturing	1671.5	9.2
Durable Goods	995.5	5.5
Nondurable Goods	676.0	3.7
Wholesale Trade	1010.9	5.6
Retail Trade	1204.8	6.7
Transportation & WH	589.2	3.3
Information	692.0	3.8
Finance, Insurance, RE	3192.4	17.6
Professional & Business Services	2737.7	15.1
Education, Health Care	1873.3	10.4
Arts, Entertainment	795.8	4.4
Other Services	538.4	3.0
Government	2081.9	11.5	1990.1	12.6
Rest of the World	243.2	1.3	130.3	0.8

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 1325.1 thousands in Aug 2020, decreasing 19.1 percent from 1638.7 thousands in Aug 2019 (https://www.bea.gov/national/xls/gap_hist.xlsx https://www.bea.gov/data/gdp/gross-domestic-product#collapse86). The seasonally adjusted annual rate of light vehicle sales in the US reached 15.2 million in Aug 2020, higher than 14.6 million in Jul 2020 and lower than 17.1 million in Aug 2019 (https://www.bea.gov/data/gdp/gross-domestic-product#collapse86).

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

Table VA-1B provides the seasonally adjusted annual rate of total vehicle sales in the United States. The rate decreased from 17.740 in Jun 2019 and 17.214 in Feb 2020 to 9.089 in Apr 2020 in the lockdown of economic activity in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. The rate recovered to 12.440 in May 2020 and 13.359 in Jun 2020 and 15.006 in Jul 2020 in gradual return to economic activity. The rate for Aug 2020 increased to 15.589 (https://www.bea.gov/data/gdp/gross-domestic-product#collapse86).

Table VA-1B, United States, Annual Rate, Total Vehicle Sales, Seasonally Adjusted Annual Rate

January	2019	17.305
February	2019	17.098
March	2019	17.830
April	2019	17.155
May	2019	17.862
June	2019	17.740
July	2019	17.527
August	2019	17.600
September	2019	17.643
October	2019	17.272
November	2019	17.437
December	2019	17.289

January	2020	17.311
February	2020	17.214
March	2020	11.809
April	2020	9.089
May	2020	12.440
June	2020	13.359
July	2020	15.006
August	2020	15.589

Source: Economic Research Division, Federal Reserve Bank of St. Louis

https://fred.stlouisfed.org/series/TOTALSA

Data for Aug 2020 and updates: https://www.bea.gov/data/gdp/gross-domestic-product#collapse86

Chart I-4 of the Economic Research Division, Federal Reserve Bank of St. Louis, provides the complete data set of SAAR of total car sales in the US. The SAAR of 9.089 in Apr 2020 is lower than the lowest rate in the global recession at 9.223 in Feb 2009.

Chart I-4, SA Annual Rate of Total Car Sales in the United States, Jan 1976 to Jul 2020

Source: Economic Research Division, Federal Reserve Bank of St. Louis

https://fred.stlouisfed.org/series/TOTALSA

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 followed by the highest decrease in the data history in the lockdown of economic activity in the COVID-19 event.

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. There is sharp contraction in Mar-Apr 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. There is initial recovery in May-Aug 2020.

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. There is sharp contraction in Mar-Apr 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. There is initial recovery in May-Aug 2020.

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. There is sharp contraction in Mar-Apr 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event.

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 Aug 2020 is lower by 9.1 percent relative to the peak in Jun 2007, as shown in Chart V-3A. Manufacturing (SIC) in Aug 2020 at 99.2841 is lower by 11.6 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 2.9 percent per year from Aug 1919 to Aug 2020. Growth at 2.9 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 155.5554 in Aug 2020. The actual index NSA in Aug 2020 is 99.2841 which is 36.2 percent below trend. The underperformance of manufacturing in Mar-Aug 2020 originates partly in the earlier global recession augmented by the current global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19. 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 163.3909 in Aug 2020. The actual index NSA in Aug 2020 is 99.2841, which is 39.2 percent below trend. Manufacturing output grew at average 1.7 percent between Dec 1986 and Aug 2020. Using trend growth of 1.7 percent per year, the index would increase to 134.0774 in Aug 2020. The output of manufacturing at 99.2841 in Aug 2020 is 26.0 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 100.4257 in Aug 2020 or 16.3 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 164.9372 in Aug 2020. The NAICS index at 100.4257 in Aug 2020 is 39.1 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 132.0705 in Aug 2020. The NAICS index at 100.4257 in Aug 2020 is 24.0 percent below trend under this alternative calculation.

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

Board of Governors of the Federal Reserve System

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

Chart V-3A, United States Manufacturing (NAICS) NSA, Jun 2007 to Aug 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 260.558 million in Aug 2020 or 28.845 million.

Chart V-3B, United States, Civilian Noninstitutional Population, Million, NSA, Jan 2007 to Aug 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 Jul 2020. Nonfarm payroll manufacturing jobs fell from 13.987 million in Aug 2007 to 12.211 million in Aug 2020, or 1.776 million.

Chart V-3C, United States, Payroll Manufacturing Jobs, NSA, Jan 2007 to Aug 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 Aug 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. There is sharp decline in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. There is initial recovery in May-Aug 2020.

Chart V-3D, United States Manufacturing (NAICS) NSA, Jan 1972 to Aug 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 Aug 2020. The noninstitutional civilian population increased from 170.042 million in Jun 1981 to 260.558 million in Aug 2020, or 90.516 million.

Chart V-3E, United States, Civilian Noninstitutional Population, Million, NSA, Jan 1948 to Aug 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 May 2020. Nonfarm payroll manufacturing jobs decreased from a peak of 18.890 million in Jun 1981 to 12.211 million in Aug 2020.

Chart V-3C, United States, Payroll Manufacturing Jobs, NSA, Jan 1939 to Aug 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 17.0 in Sep 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 7.1 in Sep 2020. There is strength in the general index for the next six months at 40.3 in Sep 2020 and strength in new orders at 39.1.

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
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
4/30/2020	-78.2	-66.3	7	11.7
5/31/2020	-48.5	-42.4	29.1	35
6/30/2020	-0.2	-0.6	56.5	52.9
7/31/2020	17.2	13.9	38.4	41.9
8/31/2020	3.7	-1.7	34.3	37.2
9/30/2020	17	7.1	40.3	39.1

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 improvement in the current index by strong positive reading with strong improvement in the future index in positive reading. There is improvement in Sep 2020.

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. There is sharp deterioration in Mar-May 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. There is major return to expansion in Jun 2020. The general index moved out of contraction of 5.3 in Feb 2013 to expansion at 15.0 in Sep 2020. New orders moved from 0.6 in Feb 2013 to expansion at 25.5 in Sep 2020. There is expansion in the future general index at 56.6 in Sep 2020 and in future new orders at 56.9 in Sep 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
Apr-20	-56.6	-70.9	43	36.5
May-20	-43.1	-25.7	49.7	54.7
Jun-20	27.5	16.7	66.3	67.9
Jul-20	24.1	23	36	55.6
Aug-20	17.2	19	38.8	55.1
Sep-20	15	25.5	56.6	56.9

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 2008 to Aug 2020. The shaded areas are the recession cycle dates of the National Bureau of Economic Research (NBER) (https://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. The current index contracts in Apr 2020 while the future index deteriorates. The current index improves in May 2020 while the future index improves. The current index expands again in Jul 2020 while the future index expands. The current index deteriorates in Aug 2020 while the future index improves. The current index deteriorates in Sep 2020 while the future index expands.

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-Apr 2020. There is improvement in the index to softer negative level in May 2020. The index improves to positive in Jun-Sep 2020.

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/

CMP Associates Regulation Blog

Followers

Blog Archive

About Me

Sunday, September 20, 2020

No comments:

Post a Comment