Paper Economy - A US Real Estate Bubble Blog: Production Pullback: Industrial Production December 2007

Wednesday, January 16, 2008

Production Pullback: Industrial Production December 2007

Today, the Federal Reserve released their monthly read of industrial production showing continued weakness to various consumer and construction related durables as well as a significant pullback to general and business vehicle production.

“Final product” consumer durable goods continue to show weakness, with particularly significant declines coming specifically from home appliances, furniture and carpeting.

Construction supply production has been showing the most severe contraction to wood products seen in at least the last 20 years.

Although automotive production has been showing weakness since the middle of 2004, business vehicle production is now showing a stark contraction.

The following charts (click for larger) show the overall consumer durable component along with the Home Appliances, Furniture and Carpeting sub-component on both a time series and year-over-year basis, construction supply production with the wood products sub-component, and general and business related vehicle production all overlaid with the last two recessions for comparisons purposes.

As you can see, each measure appears to indicate that recession is either currently upon us or drawing ever nearer as the unwinding of the housing-led business cycle exacts its toll on the general economy.

Labels: Bernanke, economy recession, Federal Reserve, housing bubble, industrial production

4 Comments:

I see some good news here. The increase in re-financing indicates the banks are facing up to their problems and starting to tackle them. It's a lot better than freezing up.

And that the short-term adjustable rate is higher than the long-term fixed rates means that the added risk of these kinds of loans is being priced in. About time.

And the 30-year rate remains low but still slightly above the 15-year rate, which means low inflation and long-term economic health are expected.

That's my optimistic read. Come on all you bears out there, bring it on!

By Dagger, at 2:41 PM
Oops, the above comments was meant for the MBA survey blog-entry just below. If it's easy you can move it.

By Dagger, at 2:50 PM
Dagger,

Ha!

Well the rates do look to be trending lower but the volumes are a bit deceptive... they may also be trending up or they could just be reflecting some noise from the holiday shortened weeks...

Also, as others have pointed out, unfortunately these volume measures don't reflect when an application has been denied by the lender.

Denials aren't segregated... its merely reflecting applications.

Also, it's important to keep in mind that the data is national so its impossible to tell how the volume is distributed.

For example, today's avg rate for a Jumbo (from Bankrate.com) was 6.42% significantly higher than the 30 fixed conforming.

The bubbliest metros need Jumbos to sustain prices and I highly doubt that we are seeing a significant up-tick in Jumbo volume.

By SoldAtTheTop, at 9:54 PM
Oops.. actually Jumbo's are 6.46% today.

By SoldAtTheTop, at 9:55 PM