'The "R" Word
A series of economic reports came out on February 15th that can best be described as "dismal". Recession is now knocking on the door. In the weeks and months to come expect to hear the "R" word much more frequently. Let's take a look at some of the reports.
Economic Reports
Industrial Output
Capital Flows
Weekly Jobless Claims
Factory Sector ISM
Industrial OutputIndustrial output falls sharply in January
U.S. industrial production fell in January by the largest amount since Hurricane Katrina devastated the Gulf Coast in September 2005, the Federal Reserve reported Thursday.Industrial output of the nation's factories, mines and utilities fell 0.5% in January, the fourth decline in the past five months. Automakers and other producers are slashing production to bring down their inventories of unsold goods.The decline in factory output was even steeper, with production down 0.7%. Production of motor vehicles and parts fell 6%. Vehicle assemblies fell to their lowest level in nearly a decade. The decline in factory output was broad based. Factory output excluding vehicles fell 0.4%.The report was "dismal," wrote Stephen Stanley, chief economist for RBS Greenwich Capital, although he judged that the January downturn was a "temporary weather-related bump in the road," not a fundamental shift in the economy."The sector is in recession," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics, noting that output fell 1.7% annualized in the fourth quarter and is heading for a decline in this quarter as well.Capacity utilization fell to 81.2% in January from 81.8% in December. This is the lowest level since last February. The Fed had been worrying about high rates of capacity utilization feeding into inflation.
"The sector is in recession," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. Indeed it is. That is in addition to the housing sector which is also clearly in recession. It should not be long before the word "sector" is replaced by the words "United States".Capital FlowsDecember sees $11 billion net capital outflow
U.S. monthly capital flows reversed in December to an outflow for the first time since June 2005, the Treasury Department reported Thursday. The U.S. recorded an outflow of $11 billion in December, compared with an inflow of $70.5 billion in November, the Treasury said.The U.S. economy has required big inflows of capital of about $70 billion every month to fund its large current account deficit, which totaled $225.6 billion in the third quarter -- about 6.8% of gross domestic product. The large inflows of foreign capital have kept U.S. interest rates lower than they would otherwise be, boosting the real-estate sector and other asset markets with cheap money.'
Industrial Output
Capital Flows
Weekly Jobless Claims
Factory Sector ISM
Industrial OutputIndustrial output falls sharply in January
U.S. industrial production fell in January by the largest amount since Hurricane Katrina devastated the Gulf Coast in September 2005, the Federal Reserve reported Thursday.Industrial output of the nation's factories, mines and utilities fell 0.5% in January, the fourth decline in the past five months. Automakers and other producers are slashing production to bring down their inventories of unsold goods.The decline in factory output was even steeper, with production down 0.7%. Production of motor vehicles and parts fell 6%. Vehicle assemblies fell to their lowest level in nearly a decade. The decline in factory output was broad based. Factory output excluding vehicles fell 0.4%.The report was "dismal," wrote Stephen Stanley, chief economist for RBS Greenwich Capital, although he judged that the January downturn was a "temporary weather-related bump in the road," not a fundamental shift in the economy."The sector is in recession," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics, noting that output fell 1.7% annualized in the fourth quarter and is heading for a decline in this quarter as well.Capacity utilization fell to 81.2% in January from 81.8% in December. This is the lowest level since last February. The Fed had been worrying about high rates of capacity utilization feeding into inflation.
"The sector is in recession," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. Indeed it is. That is in addition to the housing sector which is also clearly in recession. It should not be long before the word "sector" is replaced by the words "United States".Capital FlowsDecember sees $11 billion net capital outflow
U.S. monthly capital flows reversed in December to an outflow for the first time since June 2005, the Treasury Department reported Thursday. The U.S. recorded an outflow of $11 billion in December, compared with an inflow of $70.5 billion in November, the Treasury said.The U.S. economy has required big inflows of capital of about $70 billion every month to fund its large current account deficit, which totaled $225.6 billion in the third quarter -- about 6.8% of gross domestic product. The large inflows of foreign capital have kept U.S. interest rates lower than they would otherwise be, boosting the real-estate sector and other asset markets with cheap money.'
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