In this post, Edward Lambert takes a deeper look at capacity utilization, with a strong suggestion that it's more important to the economy than the 16% contribution that industrial production makes to the total. So maybe I have my assumption backwards.
First a H/T to Mish. Graph 1 is one He recieved from one of his readers, with the quote: "It seems rather unlikely that private economic activity is poised to accelerate under these conditions." Mish concurs, and so do I. The graph shows Growth in Bank Lending Per Capita (Black) and Real Final Sales Per Capita (Blue). Both are rolling over from extremely anemic recovery peaks.
Next, a huge H/T to Stagflationary Mark at Illusion of Prosperity, who sometimes looks at data and relationships that I would never even think of, and often goads me into a different perspective. He has graciously allowed me to use some of his graphs. Graph 2 shows the YoY % change in capital goods orders for non-defense industries. Mark added a twelve month moving average which is clearly sloping down, and is now at 0%. In the following graphs, all trend lines and modifications are Mark's.
Graph 3 shows Real Manufacturers' Sales per Capita. I've added TCU in blue. Since the beginning of this data set in 1990, it looks as if these sales have to grow in order to keep TCU constant. Alas, though, they've leveled off.
This is probably why the fraction of employees in service industries has flat-lined, as shown in Graph 7.
Not so well, as it turns out.
This doesn't mean we're going to slip back into a recession next week. I think a Japan-style decades-long doldrums is a more realistic possibility. All that requires, as graph 9 indicates, is to keep doing what we've been doing this century. Graph 9 - US Real GDP/Employed person divided by Japan Real GDP per Employed Person, is dead flat this century
I'd really like to be wrong about this.
But I can't think of any reason to suspect that I am.