The US Industrial economy backtracked last week (if pipeline scheduling is correct) as industrial production declined, while consumer spending also eased off a bit.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) declined for its second straight week, dropping to 116.8 (from last weeks 117.8). In its dailies the index showed some resilience... firming last weekend and holding above prior-week levels through Friday. Automotive-related gas-flow scheduling also finally began to ramp up, reflecting a likely end to the July retooling period (exhibited in years past as a pronounced slow-down the first two weeks of July)..
The paperboard-based Consumption Index backed off a tad from its previous weeks surge, easing to 126.8 (from last weeks 126.7). In its dailies the measure started firm then flattened vs the prior week..
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued its pattern of decline, though starting to re-accelerate in its decline.
As noted previously, we had a very close call on the economy a couple weeks back as consumption had fallen (at that time) very close to production, risking a crossing which would have opened the door to a possible resumption of recession. That door appears thankfully to have re-closed in the short-term, thanks to the recent slight gains in implied consumption.
That near miss, however, betrays the fragility of the economy, as the productive end of the US economy appears to remain entrenched in defensiveness (understandable given a government strongly-perceived by it as anti-business/investor government these days), while the consumptive segment of the US economy wavers in its perceptions and confidences in the maintenance of its perceived pro-consumer government.
On balance, the US economy looks to be underpinned (for the moment) by a cushion excess of consumption over industrial production. We will see how that cushion holds as we progress into the fall congressional elections.
-Robry825
