Industrial Production

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses industrial production.

• Factory production fell somewhat in December in the U.S. and has essentially been neutral in the past 5 months, rather than increasing as would be the case in an expanding job-creating economy. But due to good activity in last year's summer months overall production is up by nearly 3 percent from 12 months ago.
• Note that after the steep fall in production during the harsh recession of 2008-09, which took down jobs with it, manufacturers have been steadily increasing output. The increased production in turn has helped more jobs be created. The neutral activity of the past three months should therefore raise concerns about the strength of the economy. Job creation could be soft in the upcoming months.
• The production of oil and gas has been booming. Job creation therefore has been strong in Texas and North Dakota. But the production of home-related items such as furniture, appliances, and carpeting has yet to move higher. Many new household items are being imported from foreign countries. Hence, job creation in Greensboro and Hickory (North Carolina) will be slow.
• Looking at the long-term chart, the U.S. became the undisputed economic superpower because of the five-fold increase in production since the end of the Second World War. But the rate of expansion has markedly slowed in the recent past decade. In the 19th century, Britain was the economic power with massive industrial production, leading to massive exports, before succumbing to slower production in the 20th century.
• Long ago, civilization flowed from Athens. Alexander the Great subsequently spread his campaign for more territory to parts of Asia and to Egypt. That is why the famous Egyptian Queen, Cleopatra, was of Greek heritage. But the Greeks were to soon lose out to the Romans who had better production capacity. The manipulating Cleopatra, however, was determined to be on the winning side and hence seduced Julius Caesar. When Caesar died of stab wounds, this woman of infamous beauty successfully tempted Mark Anthony. When Anthony lost the Roman civil war to Augustus, Cleopatra then tried her charms on Augustus.  After Cleopatra failed to win his heart, she promptly took her own life. Now who is Katy Perry trying to emulate?