Industrial production declined for the eleventh consecutive month in July, down 0.5% from July 2015. Though the slope of the contraction continues to be unusually shallow, the fact that it has lasted for nearly a year now is significant particularly in the context of the ‘rising dollar’ period. On a monthly basis, IP is up from its low in March, particularly in the past two months (though the rise in July is susceptible to revision next month, as June’s increase was revised significantly lower with this month’s release).
As with other economic accounts, the more recent gains during spring are being considered as meaningful changes. As noted before, the drastic declines in not just markets but economy at the end of last year and the beginning of this year had the obvious effect of converting even stalwart optimists into less biased observers. What once seemed unthinkable, recession, suddenly seemed not only realistic but perhaps even imminent.
Since February, the fact that the economy does not appear to be getting worse, very much related to the ‘dollar’ after February 11 in its reverberations in sentiment and even relative economic performance (less bad), initiated a tremendous sigh of relief as if the whole matter has concluded. Every monthly gain, no matter if still in contraction year-over-year, is greeted enthusiastically as if that were the case.
This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ August 16, 2016.
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