Big Drop In Industrial Production, Consumer Energy Products Blamed; Capacity Utilization In Line

Tyler Durden's picture

The Fed reported February Industrial Production of -0.1%, a big drop from January's 0.3% increase, and a major miss from expectations of 0.6%. The primary reason for the drop was a decline in consumer goods final products which declined by 0.5%. Commentary from the Fed for the reason on this surprising decline: "The production of consumer goods fell 0.5 percent in February, largely because of weakness in consumer
energy products.
The output of consumer durable goods rose 2.4 percent, with gains in all of its major
categories. The production of consumer automotive products advanced 3.5 percent, and the index for home
electronics moved up 1.0 percent. The index for appliances, furniture, and carpeting climbed 3.1 percent,
which almost offset its decline over the two previous months, and the production of miscellaneous consumer
durables increased 0.6 percent. The output of non-energy nondurable goods moved down 0.2 percent.
Reductions in the production of foods and tobacco, of chemical products, and of paper products more than
offset an increase in clothing output. The output of consumer energy products fell 5.2 percent, largely
because of a drop in residential sales by electric and natural gas utilities.

The capacity
utilization rate for total industry edged down 0.1 percentage point to 76.3 percent, a rate 4.2 percentage
points below its average from 1972 to 2010
. And since this is a key variable for "slack" calculations by the Fed, it provides yet another clue into the possible move to QE3 as the Fed will likely see substantial potential to make up this variation from the trendline using another few hundred billion in asset purchases.

Full report


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Larry Darrell's picture

Is there still ANYONE who doubts QE infinity at this point??

If you're out there, give us just ONE reason there won't be.

Cognitive Dissonance's picture

This car is stuck in the mud and beginning to sink. If it weren't for the Fed supplied helium balloons overhead, it would have gone down 2 years ago. Gravity will not be cheated. Either you escape its grasp entirely or you delude yourself into thinking you can control it.

WALLST8MY8BALL's picture

Listen you can hear it.. we are getting near it...Its a GIANT SUCKING SOUND

FunkyMonkeyBoy's picture

ha, ha. The FED, a private institution, is going to buy up all your assets that you, your parents, your grandparents etc worked hard for...

... with money printed out of fresh air in unlimited amounts!

U.S. citizens, they must be the biggest suckers in the world. I think the scam is just so big, they can't see it. Along the same lines of 'the bigger the lie, the easier it is to believe'.

What a bunch of chumps.

LRC Fan's picture

A one world currency would be one possible reason for no more QE.  Of course everyone holding dollars would get ripped off when one dollar=1 new world amero or whatever and gas costs 10 ameros per gallon.  Then for at least a little while they could not QE and just rip us off like they did for the past 100 years until it gets out of control, rinse repeat. 

But yeah QE to the max is coming.

Rodent Freikorps's picture

Do the CBs really think they can foreclose on Japan? Is that why they are buying Yen?

dick cheneys ghost's picture

the feds are developing software that will let it  manipulate social media using fake personas


say it aint so............are we as afraid as the chinese?

chinaguy's picture

Yes, they call it "television".

ziggy59's picture

must have ran out of "weather cards"

Cdad's picture

...and soon comes the dip that no one will buy.  Again, the destruction of market credibility is staggering.  The criminal syndicate known as Wall Street has simply built the bridge to nowhere now...and radiation is simply the excuse for what is happening...liquidation.

There needs to be very high profile firings, mass lay offs from financial services, perp walks, and the shuttering of the Federal Reserve Bank, and massive reductions in Federal spending.  Nothing else matters now no matter the hyper speak, upgrades, estimate increases, new shiny bobbles....nothing else matters.

On the other side of the complete destruction of market credibility is the Republic struggling for its life.  No, not the end of the world...just the end of all the parts of it we used to know.

vote_libertarian_party's picture

Sales of residential power sales dropped 5.2%???


That doesn't make sense.  Extremely warm February in the snow belt?

curbyourrisk's picture

Blame it on the earthquake....


How long before the S&P 500 companies start warning for next quarter and blame thing on the earthquake???

LawsofPhysics's picture

finite planet, finite supply line capacity, finite demand.  Growth economics is dead.  Flat is the new up.  Soon enough, down will be the new up.  Thermodynamics is a bitch, hedge accordingly.

Rogerwilco's picture

Generals always plan to fight and win past wars. We look at the (re-animated) banks as though they represent an indicator for the health of the economy and recovery. In reality, the U.S. economy has downshifted -- look at the employment trends and ratios -- to a permanently lower level of output. The only thing hiding this ugly change is deficit spending by government.

kaiserhoff's picture

I read this as a complete collapse in new household formation.  Ain't no big surprise.

jakethesnake76's picture

Well as long as the Fed is taking care of it then i don't have to worry.... :)

jmc8888's picture

The bigger the gap gets between the real physical economy and what the fianancial numbers say, the bigger the slack 'metrics' will probably be seen to be.  In other words, there is a built in feedback loop of faulty data that will only show that they need more QE, which produces a bigger gap, which cause more slack, which needs more QE. I can work I can make more Big Ben can do more coke....