The US Industrial economy took a breather last week (if pipeline scheduling is correct) as industrial production declined, while consumer spending thankfully went the other way and surged higher.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) broke a string of three up-weeks in a row, falling to 117.8 (from last weeks 118.7). In its dailies the week was very week throughout, and appeared as if still in an extension of the July retooling period (which in years past has exhibited an end mid-month) as automotive natgas scheduling has yet to turn up. California, interestingly, had a very strong looking week.
The paperboard-based Consumption Index conversely surged to 126.7 (from last weeks 123.4). In its dailies the measure was firm throughout and especially into the weekend.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued its pattern of decelerating decline.
As noted in last Sundays economic assessment, this past week was an important week as consumption (at that time) was falling very close to production, risking a crossing which would have opened the door to a possibility of resumption of recession. We needed very badly to see a turn in the Consumption Index (and we got it).
We also got another close call on the economy (by way of the threatened curtailment of extended unemployment benefits) which was narrowly avoided Thursday when a bill finally cleared a congressional log-jam and was signed into law by the President. The move to cut unemployment threatened to push consumer spending below production, setting off a chain reaction of reduced spending... leading to production cuts... leading to layoffs... leading to reduced income... leading to reduced spending... and on and on and on.
On balance, the US economy looks to be more firmly underpinned than last week as its cushion (the ongoing excess of consumption over industrial production) got pumped by this weeks surge in (gas-flow) implied consumer spending.
-Robry825
