Here's the graph on capacity utilization. THE question of 2007 is whether we will be in a recession or not, soft landing or not. I've not looked at this graph before today. I do find of note that our capacity utilization post 2001 recession peaked at right about the same level 82%. I wonder if the capacity utilization as a whole is lower than in the 1990's due to mfg===>service sector migration. I regret that I do not know prior to posting this, but as time permits, I may nose around. Do you have nay ideas? Please offer them.
Wednesday, January 17, 2007
Capacity Utilization (FRED)
Here's the graph on capacity utilization. THE question of 2007 is whether we will be in a recession or not, soft landing or not. I've not looked at this graph before today. I do find of note that our capacity utilization post 2001 recession peaked at right about the same level 82%. I wonder if the capacity utilization as a whole is lower than in the 1990's due to mfg===>service sector migration. I regret that I do not know prior to posting this, but as time permits, I may nose around. Do you have nay ideas? Please offer them.
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3 comments:
RE: the 82% utilization level and mfg. migration.
This post (from a very interesting blog) gives a lot of food for thought on manufacturing within the US And worldwide.
http://management.curiouscatblog.net/2006/04/07/manufacturing-jobs-data-usa-and-china/
One very important point (contrary to popular belief) is that the US share of worldwide manufacturing has increased in percentage terms. Over all the loss of jobs is not so much to the Chinese, but to increased manufacturing productivity.
Some of the problems that our economy is having with wage arbitrage are probably exacerbated by phenomenal increases in productivity. Increased worker productivity combined with reduced demand due to the de-globalization was a problem in the 1920s for the world economy.
Some view this issue as one of the reasons that the great depression lasted so long. Or at least that is what Michael A. Bernstein in "The Great Depression" seems to be suggesting. In effect the argument is made that the greatly increased productivity, per unit of capital expenditure, slows the effect of recovery when manufacturing begins its recovery. Although he doesn't put it that way, increased productivity is deflationary, and deflation is not at all helpful to expanding investments.
Unless a downturn is deep enough to put out of commission permanently a large amount of our manufacturing capacity, you would expect very slow returns to previous percentages of utilization in an environment where technology is causing great strides in productivity.
Sorry the URL got cut off.
http://management.curiouscatblog
.net/2006/04/07/manufactur
ing-jobs-data-usa-and-china/
There was an interesting graph on CNBC yesterday. It showed the increase in jobs for GM and Ford v. Toyota and HOnda? They increased jobs and had decreased share. That's not a successful combination.
I'm going to post one of the tables that I found interesting.
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