Saturday, March 19, 2022

The FOMC “decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent and anticipates that ongoing increases in the target range will be appropriate.” United States Producer Prices of Finished Goods Increase 13.8 Percent and Final Demand Prices Increase 10.0 Percent in 12 Months Ending in Feb 2022, Cumulative Growth of US Manufacturing of 2.6 Percent From Sep 2021 to Feb 2022 at Annual Equivalent 5.3 Percent and Increasing 1.2 Percent in Feb 2022, US Manufacturing 7.4 Percent Higher in Feb 2022 Than A Year Earlier in the Global Recession, with Output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the Lockdown of Economic activity in the COVID-19 Event and the Through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), 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, High United States Inflation, Stagflation Risk, Worldwide Fiscal, Monetary and External Imbalances, World Cyclical Slow Growth, and Government Intervention in Globalization: Part I

 

The FOMC “decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent and anticipates that ongoing increases in the target range will be appropriate.” United States Producer Prices of Finished Goods Increase 13.8 Percent and Final Demand Prices Increase 10.0 Percent in 12 Months Ending in Feb 2022, Cumulative Growth of US Manufacturing of 2.6 Percent From Sep 2021 to Feb 2022 at Annual Equivalent 5.3 Percent and Increasing 1.2 Percent in Feb 2022, US Manufacturing 7.4 Percent Higher in Feb 2022 Than A Year Earlier in the Global Recession, with Output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the Lockdown of Economic activity in the COVID-19 Event and the Through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), 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, High United States Inflation, Stagflation Risk, Worldwide Fiscal, Monetary and External Imbalances, 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, 2021, 2022.

I United States Industrial Production

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

IC United States Inflation

IC Long-term US Inflation

ID Current US Inflation

IE Theory and Reality of Economic History, Cyclical Slow Growth Not Secular Stagnation and Monetary Policy Based on Fear of Deflation

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

Preamble. United States total public debt outstanding is $30.3 trillion and debt held by the public $23.8 trillion (https://fiscaldata.treasury.gov/datasets/debt-to-the-penny/debt-to-the-penny). The Net International Investment Position of the United States, or foreign debt, is $16.1 trillion (https://www.bea.gov/sites/default/files/2021-12/intinv321.pdf https://cmpassocregulationblog.blogspot.com/2022/01/increase-in-dec-2021-of-nonfarm-payroll.html). The United States current account deficit is 3.7 percent of GDP in IIIQ2021 (https://cmpassocregulationblog.blogspot.com/2022/01/increase-in-dec-2021-of-nonfarm-payroll.html). The Treasury deficit of the United States reached $2.8 trillion in fiscal year 2021 (https://fiscal.treasury.gov/reports-statements/mts/). Total assets of Federal Reserve Banks reached $9.0 trillion on Mar 16, 2022 and securities held outright reached $8.5 trillion (https://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab1). US GDP nominal NSA reached $24.0 trillion in IVQ2021 (https://apps.bea.gov/iTable/index_nipa.cfm). Total Treasury interest-bearing, marketable debt held by private investors increased from $3635 billion in 2007 to $16,439 billion in Sep 2021 (Fiscal Year 2021) or increase by 352.2 percent (https://fiscal.treasury.gov/reports-statements/treasury-bulletin/).

Chart CPI-H provides 12 months percentage changes of the US Consumer Price Index from 1982 to 2022. The increase of 7.9 percent of the US CPI in the 12 months ending in Feb 2022 is the highest since 8.4 percent in Jan 1982 in the beginning adjustment from the Great Inflation.

clip_image001

Chart CPI-H, US, Consumer Price Index, 12-Month Percentage Change, NSA, 1982-2022

Source: US Bureau of Labor Statistics https://www.bls.gov/cpi/data.htm

Chart VII-4 of the Energy Information Administration provides the price of the Natural Gas Futures Contract increasing from $2.581 on Jan 4, 2021 to $4.568 per million Btu on Mar 15, 2022 or 77.0 percent.

clip_image003

Chart VII-4, US, Natural Gas Futures Contract 1

Source: US Energy Information Administration

https://www.eia.gov/dnav/ng/hist/rngc1d.htm

Chart VII-5 of the US Energy Administration provides US field production of oil decreasing from a peak of 12,966 thousand barrels per day in Nov 2019 to the final point of 11.567 thousand barrels per day in Dec 2021.

clip_image005

Chart VII-5, US, US, Field Production of Crude Oil, Thousand Barrels Per Day

Source: US Energy Information Administration

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=M

Chart VI-6 of the US Energy Information Administration provides imports of crude oil. Imports increased from 245,369 thousand barrels per day in Jan 2021 to 265,228 thousand in Dec 2021.

clip_image007

Chart VII-6, US, US, Imports of Crude Oil and Petroleum Products, Thousand Barrels

Source: US Energy Information Administration

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMUS1&f=M

Chart VI-7 of the EIA provides US Petroleum Consumption, Production, Imports, Exports and Net Imports 1950-2020. There was sharp increase in production in the final segment that reached consumption in 2020.

clip_image009

Chart VI-7, US Petroleum Consumption, Production, Imports, Exports and Net Imports 1950-2020, Million Barrels Per Day

https://www.eia.gov/energyexplained/oil-and-petroleum-products/imports-and-exports.php

I United States Industrial Production. This Section I provides data and analysis showing the underperformance in manufacturing in the lost cycle of the global recession without output underperforming below trend worldwide and in the global recession with output in the US reaching in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

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 1.4 percent in Jan 2022 and decreased 0.1 percent in Dec 2021 after increasing 0.9 percent in Nov 2021, 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 May 28, 2021 (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. The most prominent features of the revision are an update of the base year to 2017 for the indexes, a conversion of the industry-group indexes to the 2017 North American Industry Classification System (NAICS), the incorporation of comprehensive annual production data for 2017 through 2019, and the incorporation of new survey utilization rate data for 2019 and 2020.[1]

On net, the revisions to total IP for recent years are negative. Notably, the updated rates of change are 1 to 1-1/2 percentage points lower per year from 2017 through 2019.[2] The cumulative effect of these revisions leaves the level of total IP in April 2021 about 3-1/2 percent below its late-2007 peak before the Great Recession; previously, total IP in April 2021 was slightly above its peak before the Great Recession. The incorporation of detailed data for manufacturing from the U.S. Census Bureau's 2017 Economic Census (EC) and the 2018 and 2019 Annual Surveys of Manufactures (ASMs) accounts for the majority of the differences between the current and the previously published estimates. The revisions to the rates of change for 2020 are small, and the magnitude of the sharp drop (17 percent) in total IP at the onset of the pandemic in early 2020 is very similar to the magnitude reported earlier.

Annual capacity growth is revised down about 1 percentage point, on average, from 2017 to 2019 and is little changed in 2020. After these revisions, capacity for total industry is estimated to have grown about 3 percent less between 2016 and the end of 2020 than previously estimated.

In the fourth quarter of 2020, capacity utilization for total industry stood at 73.4 percent, about 1/2 percentage point below its previous estimate and about 6-1/4 percentage points below its long-run (1972–2020) average. The utilization rate for 2019 is also about 1/2 percentage point lower than the previous estimate, but revisions to utilization rates for 2017 and 2018 are very small.”

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

“Total industrial production rose 0.5 percent in February to a level that is 103.6 percent of its 2017 average. Manufacturing output increased 1.2 percent after having been little changed in each of the previous two months. In February, the index for utilities declined 2.7 percent, and the output of mines edged up 0.l percent. Total industrial production in February was 7.5 percent higher than its year-earlier level, but severe winter weather in February 2021 significantly suppressed industrial activity that month. A more useful comparison shows that the index has advanced a still-strong 4.2 percent since January 2021. Capacity utilization for the industrial sector increased 0.3 percentage point in February to 77.6 percent, a rate that is 1.9 percentage points below its long-run (1972–2021) average.”

In the six months ending in Feb 2022, United States national industrial production accumulated change of 2.5 percent at the annual equivalent rate of 5.1 percent, which is lower than growth of 7.5 percent in the 12 months ending in Feb 2022. Excluding decrease of 1.2 percent in Sep 2021, growth in the remaining five months from Sep 2021 to Feb 2022 accumulated to 3.7 percent or 9.2 percent annual equivalent. Industrial production increased 1.4 percent in two of the past six months, 0.8 percent in one month, 0.5 percent in one month, minus 1.2 percent in one month and minus 0.4 percent in one month. Industrial production increased at annual equivalent 6.1 percent in the most recent quarter from Dec 2021 to Feb 2022 and increased at 4.0 percent annual equivalent in the prior quarter from Sep 2021 to Nov 2021. Business equipment accumulated change of 2.1 percent in the six months from Sep 2021 to Feb 2022, at the annual equivalent rate of 4.2 percent, which is lower than growth of 6.2 percent in the 12 months ending in Feb 2022. 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 0.3 percentage point in February to 77.6 percent, a rate that is 1.9 percentage points below its long-run (1972–2021) average.” United States industry apparently decelerated to a lower growth rate followed by possible acceleration, oscillating growth in past months and deep contraction in the global recession, with output in the US reaching in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

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

 

Feb 22

Jan 22

Dec 21

Nov 21

Oct 21

Sep 21

Feb 22/

Feb 21

Total

0.5

1.4

-0.4

0.8

1.4

-1.2

7.5

Market
Groups

              

Final Products

0.4

1.7

-0.4

0.8

0.8

-0.9

5.5

Consumer Goods

-0.4

2.4

-0.7

0.9

0.3

-0.9

3.5

Business Equipment

1.9

-0.5

-0.1

0.6

1.1

-0.9

6.2

Non
Industrial Supplies

0.9

0.8

-0.4

1.2

0.9

0.2

7.5

Construction

1.6

-1.0

0.6

1.9

1.4

1.2

8.8

Materials

0.5

1.3

-0.4

0.6

2.1

-2.0

9.4

Industry Groups

              

Manufacturing

1.2

0.1

-0.1

0.5

1.7

-0.8

7.4

Mining

0.1

1.3

-0.1

0.5

3.7

-2.1

17.3

Utilities

-2.7

10.4

-2.6

2.8

-3.6

-2.9

-1.2

Capacity

77.6

77.3

76.3

76.6

76.1

75.1

0.6

Sources: Board of Governors of the Federal Reserve System

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

Manufacturing increased 1.2 percent in Feb 2022 and increased 0.1 percent in Jan 2022 after decreasing 0.1 percent in Dec 2021, seasonally adjusted, increasing 7.4 percent not seasonally adjusted in the 12 months ending in Feb 2022, as shown in Table I-2. Manufacturing increased cumulatively 2.6 percent in the six months ending in Feb 2022 or at the annual equivalent rate of 5.3 percent. Excluding the decrease of 0.8 percent in Sep 2021, manufacturing increased 3.4 percent from Sep 2021 to Feb 2022 or at the annual equivalent rate of 8.4 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 May 28, 2021 (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. The most prominent features of the revision are an update of the base year to 2017 for the indexes, a conversion of the industry-group indexes to the 2017 North American Industry Classification System (NAICS), the incorporation of comprehensive annual production data for 2017 through 2019, and the incorporation of new survey utilization rate data for 2019 and 2020.[1]

On net, the revisions to total IP for recent years are negative. Notably, the updated rates of change are 1 to 1-1/2 percentage points lower per year from 2017 through 2019.[2] The cumulative effect of these revisions leaves the level of total IP in April 2021 about 3-1/2 percent below its late-2007 peak before the Great Recession; previously, total IP in April 2021 was slightly above its peak before the Great Recession. The incorporation of detailed data for manufacturing from the U.S. Census Bureau's 2017 Economic Census (EC) and the 2018 and 2019 Annual Surveys of Manufactures (ASMs) accounts for the majority of the differences between the current and the previously published estimates. The revisions to the rates of change for 2020 are small, and the magnitude of the sharp drop (17 percent) in total IP at the onset of the pandemic in early 2020 is very similar to the magnitude reported earlier.

Annual capacity growth is revised down about 1 percentage point, on average, from 2017 to 2019 and is little changed in 2020. After these revisions, capacity for total industry is estimated to have grown about 3 percent less between 2016 and the end of 2020 than previously estimated.

In the fourth quarter of 2020, capacity utilization for total industry stood at 73.4 percent, about 1/2 percentage point below its previous estimate and about 6-1/4 percentage points below its long-run (1972–2020) average. The utilization rate for 2019 is also about 1/2 percentage point lower than the previous estimate, but revisions to utilization rates for 2017 and 2018 are very small.”

Manufacturing decreased 22.4 percent from the peak in Jun 2007 to the trough in Apr 2009 and increased 13.5 percent from the trough in Apr 2009 to Dec 2019. Manufacturing increased 10.9 percent from the trough in Apr 2009 to Dec 2020. Manufacturing in Dec 2020 is lower by 13.9 percent relative to the peak in Jun 2007. Manufacturing increased 14.9 percent from the trough in Apr 2009 to Dec 2021. Manufacturing in Dec 2021 is 10.8 percent below the peak in Jun 2007. Manufacturing increased 17.8 percent from the trough in Apr 2009 to Feb 2022. Manufacturing in Feb 2022 is 8.5 percent below the peak in Apr 2009. US economic growth has been at only 2.2 percent on average in the cyclical expansion in the 50 quarters from IIIQ2009 to IVQ2021 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). 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, 201 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) (https://apps.bea.gov/iTable/index_nipa.cfm) and the second estimate of GDP for IVQ2021 (https://www.bea.gov/sites/default/files/2022-02/gdp4q21_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 2.9 percent obtained by dividing GDP of $15,605.6 billion in IIQ2010 by GDP of $15,161.8 billion in IIQ2009 {[($15,605.6/$15,161.8) -1]100 = 2.9%], or accumulating the quarter on quarter growth rates (https://cmpassocregulationblog.blogspot.com/2022/02/us-gdp-growing-at-saar-of-70-percent-in.html and earlier https://cmpassocregulationblog.blogspot.com/2022/01/fomc-states-with-inflation-well-above-2.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 IQ1988, 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 IIIQ1992, 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, 3.7 percent from IQ1983 to IQ1994, 3.7 percent from IQ1983 to IIQ1994, 3.7 percent from IQ1983 to IIIQ1994, 3.7 percent from IQ1983 to IVQ1994, 3.6 percent from IQ1983 to IQ1995, 3.6 percent from IQ1983 to IIQ1995 and at 7.9 percent from IQ1983 to IVQ1983 (https://cmpassocregulationblog.blogspot.com/2022/02/us-gdp-growing-at-saar-of-70-percent-in.html and earlier https://cmpassocregulationblog.blogspot.com/2022/01/fomc-states-with-inflation-well-above-2.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 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 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 IVQ2021 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) would have accumulated to 51.3 percent. GDP in IVQ2021 would be $23,849.2 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $4038.6 billion than actual $19,810.6 billion. There are more than four trillion dollars of GDP less than at trend, explaining the 23.2 million unemployed or underemployed equivalent to actual unemployment/underemployment of 13.3 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/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event (https://cmpassocregulationblog.blogspot.com/2022/03/increase-in-feb-2022-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2022/02/increase-in-jan-2022-of-nonfarm-payroll.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/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm). US GDP in IVQ2021 is 16.9 percent lower than at trend. US GDP grew from $15,767.1 billion in IVQ2007 in constant dollars to $19,810.6 billion in IVQ2021 or 25.6 percent at the average annual equivalent rate of 1.6 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 3.0 percent per year from Feb 1919 to Feb 2022. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 162.3669 in Feb 2022. The actual index NSA in Feb 2022 is 101.4579 which is 37.5 percent below trend. The underperformance of manufacturing in Mar-Nov 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). 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 106.8161 in Dec 2007 to 169.1965 in Feb 2022. The actual index NSA in Feb 2022 is 101.4579, which is 40.0 percent below trend. Manufacturing output grew at average 1.8 percent between Dec 1986 and Feb 2022. Using trend growth of 1.8 percent per year, the index would increase to 137.5298 in Feb 2022. The output of manufacturing at 101.4579 in Feb 2022 is 26.2 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.5167 in Jul 2007 to the low of 84.7321 in May 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7321 in Apr 2009 to 102.5311 in Feb 2022 or 21.0 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 104.6868 in Dec 2007 to 170.4304 in Feb 2022. The NAICS index at 102.5311 in Feb 2021 is 39.8 percent 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 104.6868 in Dec 2007 to 132.9246 in Feb 2022. The NAICS index at 102.5311 in Feb 2022 is 22.9 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 ∆%

2022-02

1.2

7.4

2022-01

0.1

2.5

2021-12

-0.1

3.7

2021-11

0.5

4.7

2021-10

1.7

4.4

2021-09

-0.8

4.3

2021-08

-0.5

5.1

2021-07

1.4

7.8

2021-06

-0.2

10.2

2021-05

0.8

18.5

2021-04

-0.2

24.2

2021-03

3.4

3.8

2021-02

-3.7

-4.1

2021-01

1.5

-0.4

2020-12

0.6

-2.3

2020-11

0.6

-2.9

2020-10

1.5

-2.5

2020-09

0.1

-5.3

2020-08

1.6

-5.2

2020-07

4.0

-6.4

2020-06

7.3

-10.3

2020-05

4.6

-16.0

2020-04

-15.8

-20.4

2020-03

-4.4

-5.5

2020-02

0.0

-0.9

2020-01

-0.2

-1.7

2019-12

0.0

-2.0

2019-11

0.7

-1.9

2019-10

-0.7

-3.1

2019-09

-0.6

-3.1

2019-08

0.5

-2.4

2019-07

-0.4

-2.9

2019-06

0.2

-2.0

2019-05

0.1

-1.9

2019-04

-0.8

-2.9

2019-03

-0.1

-1.1

2019-02

-0.5

-1.0

2019-01

-0.7

0.5

2018-12

0.2

0.5

2018-11

-0.4

0.1

2018-10

-0.5

0.5

2018-09

0.0

2.3

2018-08

0.2

2.3

2018-07

0.2

1.7

2018-06

0.5

1.2

2018-05

-0.8

0.8

2018-04

0.6

2.7

2018-03

0.1

1.8

2018-02

0.9

1.6

2018-01

-0.4

0.6

2017-12

-0.2

1.3

2017-11

0.0

1.5

2017-10

1.0

1.3

2017-09

0.0

0.3

2017-08

-0.3

0.7

2017-07

-0.2

0.6

2017-06

0.0

0.8

2017-05

-0.1

0.9

2017-04

1.1

-0.3

2017-03

-0.3

0.4

2017-02

-0.1

0.2

2017-01

0.3

-0.2

2016-12

0.0

0.1

2016-11

-0.1

-0.4

2016-10

0.1

-0.4

2016-09

0.2

-0.3

2016-08

-0.5

-1.5

2016-07

0.2

-1.3

2016-06

0.2

-0.6

2016-05

0.0

-1.3

2016-04

-0.2

-0.6

2016-03

-0.1

-1.7

2016-02

-0.3

-0.5

2016-01

0.5

-0.8

2015-12

-0.3

-1.9

2015-11

-0.3

-1.7

2015-10

-0.1

-0.7

2015-09

-0.3

-1.7

2015-08

-0.5

-0.7

2015-07

0.8

-0.4

2015-06

-0.4

-1.2

2015-05

0.0

-0.3

2015-04

0.0

-0.1

2015-03

0.3

-0.1

2015-02

-0.7

0.5

2015-01

-0.5

1.9

2014-12

-0.2

1.6

2014-11

0.7

1.7

2014-10

-0.1

0.9

2014-09

0.0

1.1

2014-08

-0.6

1.2

2014-07

0.5

2.0

2014-06

0.3

1.4

2014-05

0.3

1.4

2014-04

0.0

1.0

2014-03

0.8

1.5

2014-02

0.9

0.3

2014-01

-1.0

-0.5

2013-12

-0.2

0.1

2013-11

0.0

1.2

2013-10

0.1

1.9

2013-09

0.1

1.2

2013-08

0.9

1.4

2013-07

-0.8

0.3

2013-06

0.1

0.7

2013-05

0.3

0.9

2013-04

-0.3

0.9

2013-03

-0.1

0.5

2013-02

0.4

0.7

2013-01

-0.3

0.7

2012-12

0.7

1.6

2012-11

0.6

1.6

2012-10

-0.2

0.7

2012-09

-0.2

1.6

2012-08

-0.1

2.2

2012-07

-0.2

2.5

2012-06

0.3

3.4

2012-05

-0.4

3.4

2012-04

0.5

3.8

2012-03

-0.5

2.8

2012-02

0.3

4.1

2012-01

0.8

3.5

2011-12

0.7

3.0

2011-11

-0.2

2.6

2011-10

0.5

2.7

2011-09

0.3

2.6

2011-08

0.5

2.0

2011-07

0.6

2.2

2011-06

0.1

1.7

2011-05

0.0

1.5

2011-04

-0.5

2.8

2011-03

0.6

4.5

2011-02

0.2

4.9

2011-01

0.1

4.9

2010-12

0.5

5.5

2010-11

0.1

4.6

2010-10

0.1

5.9

2010-09

0.0

6.1

2010-08

0.1

6.8

2010-07

0.6

7.5

2010-06

0.0

9.4

2010-05

1.3

9.0

2010-04

0.8

7.4

2010-03

1.3

5.2

2010-02

-0.1

1.8

2010-01

1.1

1.8

2009-12

-0.2

-2.8

2009-11

1.0

-5.8

2009-10

0.1

-8.9

2009-09

1.0

-10.4

2009-08

1.1

-13.5

2009-07

1.6

-15.3

2009-06

-0.2

-17.9

2009-05

-1.1

-18.0

2009-04

-0.7

-18.6

2009-03

-1.9

-17.7

2009-02

-0.1

-16.7

2009-01

-3.2

-17.1

2008-12

-3.3

-14.4

2008-11

-2.5

-11.7

2008-10

-0.7

-9.1

2008-09

-3.4

-8.6

2008-08

-1.2

-5.1

2008-07

-1.1

-3.6

2008-06

-0.7

-3.3

2008-05

-0.6

-2.5

2008-04

-1.0

-1.2

2008-03

-0.4

-0.6

2008-02

-0.7

1.0

2008-01

-0.2

2.4

2007-12

0.1

2.0

2007-11

0.5

3.4

2007-10

-0.2

2.8

2007-09

0.3

2.8

2007-08

-0.3

2.6

2007-07

0.0

3.6

2007-06

0.3

3.1

2007-05

-0.1

3.3

2007-04

0.7

3.8

2007-03

0.9

2.7

2007-02

0.3

1.7

2007-01

-0.4

1.3

2006-12

1.5

2.8

2005-12

0.1

3.5

2004-12

0.7

4.1

2003-12

0.0

2.2

2002-12

-0.6

2.4

2001-12

0.2

-5.4

2000-12

-0.6

0.7

1999-12

0.7

5.2

Average ∆% Dec 1986-Dec 2021

  

1.7

Average ∆% Dec 1986-Dec 2020

  

1.6

Average ∆% Dec 1986-Dec 2019

  

1.8

Average ∆% Dec 1986-Dec 2018

  

1.9

Average ∆% Dec 1986-Dec 2017

  

1.9

Average ∆% Dec 1986-Dec 2016

  

1.9

Average ∆% Dec 1986-Dec 2015

  

2.0

Average ∆% Dec 1986-Dec 2014

  

2.1

Average ∆% Dec 1986-Dec 2013

  

2.2

Average ∆% Dec 1986-Dec 1999

  

4.3

Average ∆% Dec 1999-Dec 2006

  

1.4

Average ∆% Dec 1986-Dec 2006

  

3.3

Average ∆% Dec 1999-Dec 2017

  

0.3

Average ∆% Dec 1999-Dec 2018

  

0.3

Average ∆% Dec 1999-Dec 2019

  

0.2

∆% Peak 110.8954 in 06/2007 to 86.0957 in 04/2009

  

-22.4

∆% Trough 86.0957 in 06/2007 to 97.7118 in 12/2019

  

13.5

∆% Peak 110.8954 in 04/2009 to 97.7118 in 12/2019

  

-11.9

Average ∆% Dec 1999-Dec 2020

  

0.03

Average ∆% Dec 1999-Dec 2021

  

0.2

∆% Trough 86.0957 in 06/2007 to 95.4579 in 12/2020

  

10.9

∆% Peak 110.8954 in 04/2009 to 95.4579 in 12/2020

  

-13.9

∆% Trough 86.0957 in 04/2009 to 98.9628 in 12/2021

  

14.9

∆% Peak 110.8954 in 06/2007 to 98.9628 in 12/2021

  

-10.8

∆% Trough 86.0957 in 04/2009 to 101.4579 in 2/2022

  

17.8

∆% Peak 110.8954 in 04/2009 to 101.4579 in 2/2022

  

-8.5

Sources: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.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 is for Dec 2021. There is sharp contraction of output followed by continuing recovery in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). 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 3.0 percent per year from Feb 1919 to Feb 2022. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 162.3669 in Feb 2022. The actual index NSA in Feb 2022 is 101.4579 which is 37.5 percent below trend. The underperformance of manufacturing in Mar-Nov 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). 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 106.8161 in Dec 2007 to 169.1965 in Feb 2022. The actual index NSA in Feb 2022 is 101.4579, which is 40.0 percent below trend. Manufacturing output grew at average 1.8 percent between Dec 1986 and Feb 2022. Using trend growth of 1.8 percent per year, the index would increase to 137.5298 in Feb 2022. The output of manufacturing at 101.4579 in Feb 2022 is 26.2 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.5167 in Jul 2007 to the low of 84.7321 in May 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7321 in Apr 2009 to 102.5311 in Feb 2022 or 21.0 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 104.6868 in Dec 2007 to 170.4304 in Feb 2022. The NAICS index at 102.5311 in Feb 2021 is 39.8 percent 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 104.6868 in Dec 2007 to 132.9246 in Feb 2022. The NAICS index at 102.5311 in Feb 2022 is 22.9 percent below trend under this alternative calculation.

clip_image010

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.svg

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/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

clip_image011

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/ipg2.svg

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/2022/02/us-gdp-growing-at-saar-of-70-percent-in.html and earlier https://cmpassocregulationblog.blogspot.com/2022/01/fomc-states-with-inflation-well-above-2.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/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

clip_image012

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/ipg3.svg

United States manufacturing output from 1919 to 2022 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 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 3.0 percent per year from Feb 1919 to Feb 2022. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 162.3669 in Feb 2022. The actual index NSA in Feb 2022 is 101.4579 which is 37.5 percent below trend. The underperformance of manufacturing in Mar-Nov 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). 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 106.8161 in Dec 2007 to 169.1965 in Feb 2022. The actual index NSA in Feb 2022 is 101.4579, which is 40.0 percent below trend. Manufacturing output grew at average 1.8 percent between Dec 1986 and Feb 2022. Using trend growth of 1.8 percent per year, the index would increase to 137.5298 in Feb 2022. The output of manufacturing at 101.4579 in Feb 2022 is 26.2 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.5167 in Jul 2007 to the low of 84.7321 in May 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7321 in Apr 2009 to 102.5311 in Feb 2022 or 21.0 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 104.6868 in Dec 2007 to 170.4304 in Feb 2022. The NAICS index at 102.5311 in Feb 2021 is 39.8 percent 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 104.6868 in Dec 2007 to 132.9246 in Feb 2022. The NAICS index at 102.5311 in Feb 2022 is 22.9 percent below trend under this alternative calculation.

clip_image013

Chart I-4, US, Manufacturing Output, 1919-2022

Source: Board of Governors of the Federal Reserve System

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

Industrial production increased 0.5 percent in Feb 2022 and increased 1.4 percent in Jan 2022 after decreasing 0.4 percent in Dec 2021, with all data seasonally adjusted, as shown in Table I-1. Manufacturing decreased 22.4 percent from the peak in Jun 2007 to the trough in Apr 2009 and increased 13.5 percent from the trough in Apr 2009 to Dec 2019. Manufacturing increased 10.9 percent from the trough in Apr 2009 to Dec 2020. Manufacturing in Dec 2020 is lower by 13.9 percent relative to the peak in Jun 2007. Manufacturing increased 14.9 percent from the trough in Apr 2009 to Dec 2021. Manufacturing in Dec 2021 is 10.8 percent below the peak in Jun 2007. Manufacturing increased 17.8 percent from the trough in Apr 2009 to Feb 2022. Manufacturing in Feb 2022 is 8.5 percent below the peak in Apr 2009. US economic growth has been at only 2.2 percent on average in the cyclical expansion in the 50 quarters from IIIQ2009 to IVQ2021 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). 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, 201 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) (https://apps.bea.gov/iTable/index_nipa.cfm) and the second estimate of GDP for IVQ2021 (https://www.bea.gov/sites/default/files/2022-02/gdp4q21_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 2.9 percent obtained by dividing GDP of $15,605.6 billion in IIQ2010 by GDP of $15,161.8 billion in IIQ2009 {[($15,605.6/$15,161.8) -1]100 = 2.9%], or accumulating the quarter on quarter growth rates (https://cmpassocregulationblog.blogspot.com/2022/02/us-gdp-growing-at-saar-of-70-percent-in.html and earlier https://cmpassocregulationblog.blogspot.com/2022/01/fomc-states-with-inflation-well-above-2.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 IQ1988, 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 IIIQ1992, 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, 3.7 percent from IQ1983 to IQ1994, 3.7 percent from IQ1983 to IIQ1994, 3.7 percent from IQ1983 to IIIQ1994, 3.7 percent from IQ1983 to IVQ1994, 3.6 percent from IQ1983 to IQ1995, 3.6 percent from IQ1983 to IIQ1995 and at 7.9 percent from IQ1983 to IVQ1983 (https://cmpassocregulationblog.blogspot.com/2022/02/us-gdp-growing-at-saar-of-70-percent-in.html and earlier https://cmpassocregulationblog.blogspot.com/2022/01/fomc-states-with-inflation-well-above-2.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 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 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 IVQ2021 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) would have accumulated to 51.3 percent. GDP in IVQ2021 would be $23,849.2 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $4038.6 billion than actual $19,810.6 billion. There are more than four trillion dollars of GDP less than at trend, explaining the 23.2 million unemployed or underemployed equivalent to actual unemployment/underemployment of 13.3 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/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event (https://cmpassocregulationblog.blogspot.com/2022/03/increase-in-feb-2022-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2022/02/increase-in-jan-2022-of-nonfarm-payroll.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/covid19/effects-of-covid-19-pandemic-and-response-on-the-employment-situation-news-release.htm). US GDP in IVQ2021 is 16.9 percent lower than at trend. US GDP grew from $15,767.1 billion in IVQ2007 in constant dollars to $19,810.6 billion in IVQ2021 or 25.6 percent at the average annual equivalent rate of 1.6 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 3.0 percent per year from Feb 1919 to Feb 2022. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 162.3669 in Feb 2022. The actual index NSA in Feb 2022 is 101.4579 which is 37.5 percent below trend. The underperformance of manufacturing in Mar-Nov 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). 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 106.8161 in Dec 2007 to 169.1965 in Feb 2022. The actual index NSA in Feb 2022 is 101.4579, which is 40.0 percent below trend. Manufacturing output grew at average 1.8 percent between Dec 1986 and Feb 2022. Using trend growth of 1.8 percent per year, the index would increase to 137.5298 in Feb 2022. The output of manufacturing at 101.4579 in Feb 2022 is 26.2 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.5167 in Jul 2007 to the low of 84.7321 in May 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7321 in Apr 2009 to 102.5311 in Feb 2022 or 21.0 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 104.6868 in Dec 2007 to 170.4304 in Feb 2022. The NAICS index at 102.5311 in Feb 2021 is 39.8 percent 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 104.6868 in Dec 2007 to 132.9246 in Feb 2022. The NAICS index at 102.5311 in Feb 2022 is 22.9 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 87.8 percent in IIIQ2021. Most of US national income is in the form of services. In Jan 2022, there were 147.525 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 126.583 million NSA in Feb 2022 accounted for 85.0 percent of total nonfarm jobs of 148.967 million, of which 12.568 million, or 9.9 percent of total private jobs and 8.4 percent of total nonfarm jobs, were in manufacturing. Private service-providing jobs were 106.131 million NSA in Feb 2022, or 71.2 percent of total nonfarm jobs and 83.8 percent of total private-sector jobs. Manufacturing has share of 9.7 percent in US national income in IIIQ2021 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

 

IIQ2021

% Total

IIIQ2021

% Total

National Income WCCA

19,157.3

100.0

19,825.3

100.0

Domestic Industries

18,926.9

98.8

19,557.7

98.6

Private Industries

16,822.0

87.8

17,403.2

87.8

Agriculture

189.2

1.0

198.2

1.0

Mining

155.5

0.8

191.0

1.0

Utilities

199.1

1.0

207.4

1.0

Construction

999.5

5.2

1060.2

5.3

Manufacturing

1842.8

9.6

1918.3

9.7

Durable Goods

1091.0

5.7

1092.7

5.5

Nondurable Goods

751.8

3.9

825.5

4.2

Wholesale Trade

1064.3

5.6

1106.0

5.6

Retail Trade

1437.2

7.5

1417.4

7.1

Transportation & WH

571.4

3.0

625.8

3.2

Information

802.7

4.2

835.5

4.2

Finance, Insurance, RE

3407.2

17.8

3445.7

17.4

Professional & Business Services

2972.9

15.5

3063.1

15.5

Education, Health Care

1975.3

10.3

2048.9

10.3

Arts, Entertainment

685.5

3.6

743.0

3.7

Other Services

519.5

2.7

542.9

2.7

Government

2104.9

11.0

2,154.5

10.9

Rest of the World

230.4

1.2

267.7

1.4

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 1052.5 thousand in Feb 2022, decreasing 11.8 percent from 1193.8 thousand in Feb 2021 (https://www.bea.gov/data/gdp/gross-domestic-product#collapse86). The seasonally adjusted annual rate of light vehicle sales in the US reached 14.1 million in Feb 2022, lower than 15.0 million in Jan 2022 and lower than 15.9 million in Feb 2021 (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 in millions. The rate decreased from 17.832 in Jun 2019 and 17.337 in Feb 2020 to 8.961 in Apr 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The rate recovered to 12.438 in May 2020 and 13.447 in Jun 2020, 15.089 in Jul 2020, 15.677 in Aug 2020 and 16.703 in Sep 2020 in gradual return to economic activity. The rate for Nov 2020 decreased to 16.339 and increased to 16.761 in Dec 2020 and 17.287 in Jan 2021, decreasing to 16.392 in Feb 2021 and increasing to 18.155 in Mar 2021. The rate increased to 18.780 in Apr 2021, decreasing to 17.392 in May 2021, 15.948 in Jun 2021, 15.104 in Jul 2021, 13.503 in Aug 2021, 12.692 in Sep 2021, 13.486 in Oct 2021, 13.474 in Nov 2021 and 13.004 in Dec 2021. The rate increased to 15.475 in Jan 2022, decreasing to 15.542 in Feb 2022. (https://www.bea.gov/data/gdp/gross-domestic-product#collapse86).

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

January

2019

      

17.265

February

2019

      

17.185

March

2019

      

17.656

April

2019

      

16.997

May

2019

      

17.840

June

2019

      

17.832

July

2019

      

17.597

August

2019

      

17.645

September

2019

      

17.714

October

2019

      

17.230

November

2019

      

17.557

December

2019

      

17.339

January

2020

      

17.306

February

2020

      

17.337

March

2020

      

11.635

April

2020

      

8.961

May

2020

      

12.438

June

2020

      

13.447

July

2020

      

15.089

August

2020

      

15.677

September

2020

      

16.703

October

2020

      

16.852

November

2020

      

16.339

December

2020

      

16.761

January

2021

      

17.287

February

2021

      

16.392

March

2021

      

18.155

April

2021

      

18.780

May

2021

      

17.392

June

2021

      

15.948

July

2021

      

15.104

August

2021

      

13.503

September

2021

      

12.692

October

2021

      

13.486

November

2021

      

13.474

December

2021

      

13.004

January

2022

      

15.475

February

2022

      

14.542

Economic Research Division, Federal Reserve Bank of St. Louis

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

Data for Feb 2022 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 8.961 in Apr 2020 is lower than the lowest rate in the global recession at 9.223 in Feb 2009.

clip_image015

Chart I-4, SA Annual Rate of Total Car Sales in the United States, Jan 1976 to Dec 2021

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

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

clip_image016

Chart I-4, SA Annual Rate of Total Car Sales in the United States, Jan 1976 to Dec 2021

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 2022. 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 and sharp recovery after easing of lockdown followed by current weakness.

clip_image017

Chart 1-5, US, Motor Vehicles and Parts Output, 1972-2022

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 2022. 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/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). There is initial recovery in May 2020-Feb 2022.

clip_image018

Chart I-6, US, Output of Computers and Electronic Products, 1972-2022

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/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). There is initial recovery in May 2020-Feb 2022.

clip_image019

Chart I-7, US, Output of Durable Manufacturing, 1972-2022

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 2022 is lower by 5.5 percent relative to the peak in Jun 2007, as shown in Chart V-3A. Manufacturing (SIC) in Feb 2022 at 101.4579 is lower by 8.5 percent relative to the peak at 110.8954 in Jun 2007. 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 3.0 percent per year from Feb 1919 to Feb 2022. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 162.3669 in Feb 2022. The actual index NSA in Feb 2022 is 101.4579 which is 37.5 percent below trend. The underperformance of manufacturing in Mar-Nov 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). 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 106.8161 in Dec 2007 to 169.1965 in Feb 2022. The actual index NSA in Feb 2022 is 101.4579, which is 40.0 percent below trend. Manufacturing output grew at average 1.8 percent between Dec 1986 and Feb 2022. Using trend growth of 1.8 percent per year, the index would increase to 137.5298 in Feb 2022. The output of manufacturing at 101.4579 in Feb 2022 is 26.2 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.5167 in Jul 2007 to the low of 84.7321 in May 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7321 in Apr 2009 to 102.5311 in Feb 2022 or 21.0 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 104.6868 in Dec 2007 to 170.4304 in Feb 2022. The NAICS index at 102.5311 in Feb 2021 is 39.8 percent 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 104.6868 in Dec 2007 to 132.9246 in Feb 2022. The NAICS index at 102.5311 in Feb 2022 is 22.9 percent below trend under this alternative calculation.

clip_image020

Chart V-3A, United States Manufacturing (NAICS) NSA, Dec 2007 to Feb 2022

Board of Governors of the Federal Reserve System

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

clip_image021

Chart V-3A, United States Manufacturing (NAICS) NSA, Jun 2007 to Feb 2022

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 263.324 million in Feb 2022 or 31.611 million.

clip_image022

Chart V-3B, United States, Civilian Noninstitutional Population, Million, NSA, Jan 2007 to Feb 2022

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 2022. Nonfarm payroll manufacturing jobs fell from 13.987 million in Jun 2007 to 12.568 million in Feb 2022, or 1.419 million.

clip_image023

Chart V-3C, United States, Payroll Manufacturing Jobs, NSA, Jan 2007 to Feb 2022, 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 2022. 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/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

clip_image024

Chart V-3D, United States Manufacturing (NAICS) NSA, Jan 1972 to Feb 2022

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 2022. The noninstitutional civilian population increased from 170.042 million in Jun 1981 to 263.324 million in Feb 2022 or 93.282 million.

clip_image025

Chart V-3E, United States, Civilian Noninstitutional Population, Million, NSA, Jan 1948 to Feb 2022

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 2022. Nonfarm payroll manufacturing jobs decreased from a peak of 18.890 million in Jun 1981 to 12.568 million in Feb 2022.

clip_image026

Chart V-3F, United States, Payroll Manufacturing Jobs, NSA, Jan 1939 to Feb 2022, 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 11.8 in Mar 2022. 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 11.2 in Mar 2022. There is strength in the general index for the next six months at 36.6 in Mar 2022 and strength in new orders at 41.1.

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

 

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

10/31/2020

10.5

12.3

32.8

37.7

11/30/2020

6.3

3.7

33.9

32.9

12/31/2020

4.9

3.4

36.3

32.3

1/31/2021

3.5

6.6

31.9

34.8

2/28/2021

12.1

10.8

34.9

35.6

3/31/2021

17.4

9.1

36.4

37.9

4/30/2021

26.3

26.9

39.8

41.1

5/31/2021

24.3

28.9

36.6

35.3

6/30/2021

17.4

16.3

47.7

44.5

7/31/2021

43

33.2

39.5

34.2

8/31/2021

18.3

14.8

46.5

42.7

9/30/2021

34.3

33.7

48.4

48.4

10/31/2021

19.8

24.3

52

51

11/30/2021

30.9

28.8

36.9

34.4

12/31/2021

31.9

27.1

36.4

30

1/31/2022

-0.7

-5

35.1

32.9

2/28/2022

3.1

1.4

28.2

32.5

3/31/2022

-11.8

-11.2

36.6

41.1

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 deterioration in Dec 2020-Jan 2021 with improvement in Feb-Apr 2021 followed by mild deterioration in May 2021. The future index deteriorates in Jul 2021 while the current index improves. The future index improves in Aug 2021 while the current index deteriorates. The future index improves in Sep 2021 while the current index improves. The current index deteriorates in Oct 2021 while the future index improves. The current index improves in Nov 2021 while the future index deteriorates. The current index improves in Dec 2021 while the future index deteriorates. The current index deteriorates in Jan 2022 while the future index deteriorates. The current index improves in Feb 2022 while the future index improves. The current index deteriorates in Mar 2022 while the future index deteriorates.

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

clip_image028

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

Update: https://www.newyorkfed.org/survey/empire/empiresurvey_overview#tabs-1

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/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The general index moved out of contraction of 5.3 in Feb 2013 to expansion at 27.4 in Mar 2022. New orders moved from 0.6 in Feb 2021 to expansion at 25.8 in Mar 2022. There is expansion in the future index at 22.7 in Mar 2022 and in future new orders at 22.0 in Mar 2022.

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

11-Jan

16.5

20.1

43.8

35.9

11-Feb

28.9

19.8

41.9

38.7

11-Mar

36.4

34.1

57

55.5

11-Apr

13

13.7

35.7

30.9

11-May

6.2

8.3

26.2

25.3

11-Jun

-0.5

-5.2

8.5

8.6

11-Jul

7.1

4.1

28.6

32.2

11-Aug

-19.5

-17.5

12.6

26.6

11-Sep

-10.7

-5.6

18.1

19.6

11-Oct

6.2

5.9

26.1

28.6

11-Nov

4

1.5

36.4

36.2

11-Dec

2.4

4.4

33.7

38.6

12-Jan

7.5

10.7

43.4

43.5

12-Feb

10.4

11.6

30.3

32.2

12-Mar

8.8

-0.1

30.4

37.1

12-Apr

5.7

0.6

39.9

42.4

12-May

-0.8

2.3

24.9

35.5

12-Jun

-12.6

-17.8

25.4

34.3

12-Jul

-12.7

-3.6

21.5

25.6

12-Aug

-2.6

1.6

20

25.5

12-Sep

0.2

0.7

31.6

42.8

12-Oct

-1.1

-4.7

17.1

20.7

12-Nov

-10.6

-7.4

16.6

22.6

12-Dec

2.4

2.6

22.4

29

13-Jan

-1.4

-2

28.8

31.9

13-Feb

-5.3

0.6

32

39

13-Mar

2

0.1

35.5

38.1

13-Apr

0.4

0.7

30.6

34.4

13-May

0.2

-4

39.5

42.2

13-Jun

12.7

11.7

37.2

40

13-Jul

15.9

7.4

41.6

52.4

13-Aug

8.2

8.9

38.5

38.8

13-Sep

20.6

19.3

48.8

51.5

13-Oct

13.5

23.1

55.4

61.2

13-Nov

4.6

8.8

42

46

13-Dec

3.8

12

41.1

44.6

14-Jan

15.2

7.9

38

40.8

14-Feb

2.3

4.7

43.9

39.5

14-Mar

12.5

6.5

42.4

38.7

14-Apr

17

17.3

39.3

38.6

14-May

18.5

14.8

43.8

42.5

14-Jun

14.1

10.4

53.3

55.3

14-Jul

21.4

28.7

53.6

48.8

14-Aug

22.9

15.4

61.9

51.3

14-Sep

21.7

13.8

46.1

44.8

14-Oct

18.1

16.8

50.8

49

14-Nov

35.5

29.7

50.1

44.3

14-Dec

21.6

14.5

47.2

43.9

15-Jan

13.2

10.1

54

47

15-Feb

10.5

8.4

35

46.1

15-Mar

7.3

0.8

37.7

37.8

15-Apr

9.9

4.5

39.7

33.6

15-May

6.1

5.4

38.1

35.1

15-Jun

8.2

11.2

43.4

47.5

15-Jul

4.4

2.3

40.2

45.4

15-Aug

5.8

6.6

34.9

39.2

15-Sep

-3.8

10.5

36.8

41.7

15-Oct

-4.9

-6.4

34.8

36.4

15-Nov

-3.8

-7.6

37.5

44.3

15-Dec

-9

-8.9

18.6

29.7

16-Jan

-4

-3

18.3

21.3

16-Feb

-6.8

-6

15.8

20

16-Mar

9

5.5

26.9

35.6

16-Apr

-1

-0.5

39.9

43.6

16-May

-4.8

-1.7

39.7

40.3

16-Jun

4.4

-0.9

36.6

37.6

16-Jul

0.9

10.1

36

35.2

16-Aug

5.4

-1.5

41.9

42.8

16-Sep

12.1

2.8

37

38.3

16-Oct

10.5

19.4

36.2

40.2

16-Nov

9.4

19.4

29.8

35.1

16-Dec

22.6

15.5

45.5

44.8

17-Jan

24.8

24.9

54.7

52.3

17-Feb

39.7

35.1

50.3

49.2

17-Mar

32

31.4

56.4

59.1

17-Apr

23.7

28.5

46.2

55.5

17-May

34.3

25.2

40.2

49.5

17-Jun

28.2

27.3

38.3

39.6

17-Jul

20.4

5.3

38.5

44.6

17-Aug

20.7

22.9

42.4

50.2

17-Sep

24

26.7

54.1

58.6

17-Oct

27.2

21

46.4

43.6

17-Nov

23.1

26.5

47.9

49.1

17-Dec

29.3

29.3

50

54.6

18-Jan

23

9.6

45.4

48.2

18-Feb

30.7

29.5

40.1

49.7

18-Mar

23.8

30.3

46.8

50.2

18-Apr

25.3

22.2

43

41.1

18-May

32.2

41.3

41.5

43.7

18-Jun

21.7

21.2

38.3

41.2

18-Jul

20.8

24.9

26.8

29.8

18-Aug

10.1

12.1

36.8

36.8

18-Sep

21.3

18.5

36

35.9

18-Oct

20.5

15.5

31.9

39

18-Nov

10.6

12.2

26.4

39.1

18-Dec

10.9

14.8

29.1

36.3

19-Jan

14.8

16.7

29.7

31.8

19-Feb

-0.7

1.5

29

30.5

19-Mar

14.9

6.4

23.1

24.2

19-Apr

11

16

22.2

27

19-May

17.5

14.2

22.3

24.8

19-Jun

1.5

8

24.2

33.7

19-Jul

16.6

18.4

33.6

41.6

19-Aug

13.1

21.6

31.8

42

19-Sep

12.2

22.5

23.1

34.4

19-Oct

6.8

22.5

32.6

37.3

19-Nov

8.4

10.1

34.4

37.3

19-Dec

2.4

11.1

34.8

33.6

20-Jan

17

18.2

38.4

41.9

20-Feb

36.7

33.6

45.4

54

20-Mar

-12.7

-15.5

35.2

36.7

20-Apr

-56.6

-70.9

43

36.5

20-May

-43.1

-25.7

49.7

54.7

20-Jun

27.5

16.7

66.3

67.9

20-Jul

24.1

23

36

55.6

20-Aug

17.2

19

38.8

55.1

20-Sep

15

25.5

56.6

56.9

20-Oct

32.3

42.6

62.7

51.6

20-Nov

26.3

37.9

44.3

48.1

20-Dec

11.1

2.3

39.2

41.5

21-Jan

30.1

24.2

51.3

44.6

21-Feb

28.7

25.7

40

38.1

21-Mar

44.5

38.2

59.1

48.2

21-Apr

50.2

36

66.6

59.5

21-May

31.5

32.5

52.7

50.3

21-Jun

30.7

22.2

69.2

68.4

21-Jul

21.9

17

48.6

45.3

21-Aug

19.4

22.8

33.7

38

21-Sep

30.7

15.9

20

32.1

21-Oct

23.8

30.8

24.2

26.2

21-Nov

39

47.4

28.5

28

21-Dec

15.4

13.7

19

24.2

22-Jan

23.2

17.9

28.7

29.4

22-Feb

16

14.2

28.1

24.9

22-Mar

27.4

25.8

22.7

22

Source: Federal Reserve Bank of Philadelphia

https://www.philadelphiafed.org

Chart VA-2 of the Federal Reserve Bank of Philadelphia provides current and future general activity indexes from Jan 2008 to Mar 2022. There are multiple contractions of current activity There are major drops in 2008 and 2009 in the Global Recession. The index shows weakness from 2011 to 2015. There is a major drop in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Recovery was rapid and sharp but there is following weakness in both future and current activity.

clip_image030

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-3 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 2020-Apr 2021. The index deteriorates in May-Sep 2021, improving in Oct-Nov 2021. There is deterioration in Dec 2021 followed by improvement in Jan 2022 and deterioration in Feb 2022. There is improvement in Mar 2022.

clip_image032

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, 2021, 2022.

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