What Is Power Consumption Telling Us About The US Economy?

Tyler Durden's picture

Submitted by Erico Tavares Of Sinclair & Co.

We track US power consumption on a weekly basis as reported by Barron’s, as we believe this information provides insightful – albeit sometimes "noisy" and seasonally unadjusted – clues about the performance of the economy over time.

The expectation is that a more robust economic environment requires more power, although factors like colder winters and warmer summers relative to the norm can greatly skew the analysis. With that in mind, let’s have a look at the weekly historical performance of this indicator going back to 1995 (in MM kWhs):

Many peaks and bottoms can be observed as power demand changes seasonally over the year. We have used polynomial smoothing to extract a trend line (in black).

Some quick observations:

  • US power consumption peaked in 2006 (red line), approximately in line with the peak in the US housing market, and the trend line has flatlined since.
  • By definition a peak in consumption means that any new capacity additions, for instance to accommodate incremental renewable energy production, will need to be made at the expense of existing production capacity, which in turn will affect plant efficiencies and so forth. That being said, there is a considerable amount of coal-fired capacity, possibly even nuclear, that will be coming off-line in the coming years mainly due to environmental regulations, so it will be interesting to see how all of this will play out in the US power markets.
  • The last intra-cycle power consumption peak was recorded in 2011, broadly in line with the recent global peak in commodity prices. While most commodity price analysis commentary focuses on China as the “marginal” buyer, it seems the US still plays an important role not only as a supplier but also as a consumer.

Consumption peaks normally come in late July/early August, so it is still a bit early to gauge how 2014 is shaping up. However, in the grand scheme of things and despite the limitations of this indicator, historical kilowatt consumption suggests that the US economy at best continues to muddle along, despite an unprecedented amount of policy stimulus – some of which may even be curtailed before the end of the year.

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Escrava Isaura's picture

No income power, welcome to Free-Market capitalism.

A Nanny Moose's picture

Free market capitalism? Never heard of it. Hasn't existed in, well....ever.

Next.

Headbanger's picture

It's telling us short solar and wind power.

Stackers's picture

I will say there have been same major strides forward in the electrical efficiency of consumer goods. Computers, TVs, pool pumps, LED lights ... pretty much everything has seen lower power demands from the same items.

CrashisOptimistic's picture

Yes, one should properly say that.

But there is also population gain.

mjcOH1's picture

"What Is Power Consumption Telling Us About The US Economy?"

 

It's telling us the US population didn't really increase from 301M in 2007 to 317M today and the Kenyan has in fact increased industrial output, using fairy dust as energy.

http://en.wikipedia.org/wiki/Demographics_of_the_United_States

What do I win?

Buckaroo Banzai's picture

Bad news is, you "win" a life sentence as a tax slave.

Good news is: EVERYONE'S A WINNER!

knukles's picture

It's because of all the energy efficient electric environmentally friendly green footprint cars we're driving.
So we gotta raise your taxes, assholes.

DaddyO's picture

Steve,

Isn't it important to note that wherever you have .gov intervention there will be anamolous output or behaviour?

Say in mining, energy, banking and say even things like ebt, snap and any other sectors.

/sarc

DaddyO

MeMadMax's picture

Either way, we are still fucked...

TheRideNeverEnds's picture

pfft, the only people that are fucked are the shorts.

 

e-minis-----> The Moon.

Buster Cherry's picture

I liked those old zippy the pinhead comics from my stoner days.

+1 for your avatar and the comment. I didnt think of that, but I'll tell you what, here in Texas they're making up for any loss in gas tax by building miles and miles of toll roads and so many refugees from other states (and latin flavored countries) flooding in, you have to use the fuckers to get home in time for bed. I do my best to stay off those fuckers but it takes me and hour to drive a 20 mile straight line to and from work.

Vampyroteuthis infernalis's picture

It's telling us the US population didn't really increase from 301M in 2007 to 317M today and the Kenyan has in fact increased industrial output, using fairy dust as energy.

mjcOH1, I think the immigration numbers are exaggerated a whole lot. According to Gallup only 20% of our population identifies themselves as "liberal" while we have Obammy as POTUS. Mmmm, election fraud?

Escrava Isaura's picture

Vampyroteuthis ...

C'mon vamp, liberals are more than 20% of the population. Depend in how you conduct your survey (question) it wouldn’t surprise me if it was closer to 70%.

Anyway,  Americans are worried, rightly so, about their future, not election fraud.

Calmyourself's picture

RIGHT, i am not worried a bit about the Progs red/blue that are fucking me every day... Along of course with their media enablers no.... I am just generically worried, like an idiot, like you..

Pairadimes's picture

It's also telling us that economic conditions that lead to energy consumption prior to 2006 were markedly different from those since then. And I don't think it is because we suddenly discovered how to make far more efficient appliances in 2007.

If this is an EKG for the US economy, the patient is in trouble.

Buckaroo Banzai's picture

Maybe, but the problem is, the average household has more and more of these power consuming goods. Plus, parasitical loads have increased dramatically. Many modern appliances draw small amounts of power even when they are off. 15 years ago, this wasn't the case.

Rentier88's picture

True, and for example I have many more electrical devices now that stay plugged in using mW (example, cell phone charger etc).  But also like stated before there are key items now that use way less power.  For example, I used to run a single speed pool pump which ran at 3400rpm all the time for 5.5hrs it pulled down about 2200-2300W.  I now run a multi-speed pump and it normally runs at 1500rpm and only pulls down 190-200W but runs for 8hrs.  Pretty easy to do that math on that one.  Also, most of my lights in house now are LED.  Reason why my power bill is now averaging about $100 less a month.

Vendetta's picture

Very true, its annoying actually.  One has to unplug the stuff to stop it from consuming some power even if just an pile of LEDs

Never One Roach's picture

I know, it's crazy. Even my refrigerator stays on even after I've closed the door.

 

These modern gadgets befuddle me.

swmnguy's picture

How can you tell it's still on?  Is the light on?

Clycntct's picture

Mug shot of me on the nsa site getting ice out of the refer.

Buster Cherry's picture

Yep.

Ive been think for a while now about fitting a sub panel next to my main panel and moving most loads like the bedrooms, bathrooms, and living area on that and fit a contactor activated by time clock to drop these vampire loads while away or asleep. Only the freezer needs to be running 24/7.

SDShack's picture

Efficiencies are often more then offset by consumers upgrading to larger units. Yes, the new unit is more efficient, but overall consumption is greater because of the size increase.

Citxmech's picture

The big news here is not the leveling in power usage itself, it's that it indicates a leveling in actual economic activity based upon that energy.  

The cessation of economic growth, by itself, might not catastrophic but for our debt-based fiat currency system - in that context, it is catastrophic.  No growth implies deflation and the lack of funds to service the levels of debt necessary to support the current levels of USD issuance.

Noisy data or not - this info is just another confirmation of what many of us have thought for a long time regarding energy supply stagnation (ie oil), prices, and the collapse of the housing market in 2007/8.   

Nice data.  

Greenskeeper_Carl's picture

yep. we have been in negative real growth since 2005. using the proper deflator, really just calculating inflation the way it was done in the 1980s, we have had negative real growth since around the 3rd quarter or 2005, which means we have been in a depression since mid 2007.

ZerOhead's picture

Yes we have...

http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

Good thing Barry ran a couple of trillion dollar deficits to keep the old shitmobile going or we would have been in real trouble...

http://farm7.static.flickr.com/6129/5981605081_595bef4c30_b.jpg

duo's picture

As I noted here before, 130,000 multi family units were built last year with electric heat.  Each one of those will need 3000 watts minimum on a cold morning.  That's 400 MW right there.

astroloungers's picture

As I noted here before, 130,000 multi family units were built last year with electric heat.  Each one of those will need 3000 watts minimum on a cold morning.  That's 400 MW right there.

        I suppose we should all go long...johns?

TheReplacement's picture

But a lot of those items don't last very long - disposable.  Go back 50 years and gadgets were expected to last.  How does this affect power consumption?  Having to constantly make replacements for disposed of items costs power.  Efficiency+Disposable isn't getting us there.

disabledvet's picture

You've got a problem called "World War II" and recycling.

Water and energy consumption in California is truly amazing (meaning efficient) relative to any other State in the Union.

That's not showing what can be done in fact what is being done. I think a better measure of economic strength (weakness really) is miles driven as that is truly an energy intensive enterprise.

This has completely collapsed (2008) inside the USA even though energy production has soared (and coal prices have collapsed as well...both here and in China I might add.)

This is not a question of "esoterica" folks but of the ironclad math of thermal efficiency. Thermal coal is by far the most efficient...we just waste it all by producing electricity with it.

That curve says to me Americans are on to the game of this "grand waste" and are cutting back on their use of both peaking power and grid power in general. "You don't need a lot of battery to power your house." A single Tesla is more than enough. If the average American lives 20 miles from a Supercharger station the economics of a Model S become quite compelling IF I can use it to not just power the car but other devices in the home as well.

Lead acid batteries already offer an enormous amount of storage as is. You can even print your own solar panels now.

Very interesting story about Exxon investing in a refinery in Antwerp, Belgium. That says to me Russian natural gas extortion isn't working very well.

Buster Cherry's picture

Ive always had it in my mind that to make these hybrid vehicles even more practical and attractive would be to have that option of running the engine for transport mainly and use the electrics for plugging into your house inverter to cook dinner, run the AC and watch tv with.

Drachma's picture

The efficiency in most cases is an illusion. The gains are paltry at best. Electronic devices in almost all cases draw power 24/7, even when "off". In fact they can draw as much power while "off" as they do for the time that they are in use. LED lighting is another misdirection. When you see a figure such as '100 lumens per watt' efficiency, this does not factor in the losses due to the circuit components needed to drive the LED, which are appreciable. Well, you say, at least they don't produce a lot of heat. Yes the LED itself doesn't produce heat, but try touching the back of the circuit board driving the LED. When all said and done, that 100 lumens/watt is really 60 lumens/watt. I would argue that a well-insulated oven is more efficient than an LED. Think about that for while.

Most efficiency gains, when you look at the whole picture, are greatly muted by other factors. And all LEDs are not the same. Their lifespan depends critically on the junction temperature during operation, and poor manufacturing (read China) results in LED life-spans only fractions of what is advertised. Compact-fluorescent lighting is another 'efficiency' scam promoted here in Canada by our illustrious green-warrior David Suzuki, who sees no irony in the fact that he is promoting the use of a lighting technology that is orders of magnitude more toxic to the environment. Also, CFLs take time to come up to their most efficient operating temperature after being switched on (~20 mins). If you are just switching lights off and on in rooms all day, there are absolutely no gains in energy savings. If one of those bulbs breaks in your home you must consider it a hazardous waste disposal scenario, unless you consider mercury vapors nutritious and healthy.How efficient is their disposal in terms of energy use as opposed to disposing of a broken incandescent.

How efficient is the manufacturing process of all these new technologies, as opposed to their operating efficiencies? Gains in operating efficiency often mean losses in manufacturing efficiency and vice versa. A CFL requires more components and steps to manufacturer than a simple incandescent light bulb. Every extra component and process step adds to the inefficiency of the overall product. Wouldn't you agree? Folks its a zero-sum game. It's more hype and agenda, than of any real benefit in energy, once you look at the actual numbers. I'm not saying that this is true in absolutely every case, but in general, technological gains do not necessarily equate to significant efficiency gains when the system is analyzed as a whole from an energy perspective. Cheers.

disabledvet's picture

Solar power is not hype. Use it to light your walkways and go from there. "Still a lot of room for improvement" but the product is there.

Once you have self driving vehicles (Elon Musk says he'll have it next model year) then that's the end for needing public transportation.

PERIOD.

No more buses, taxis, subways...you name it. You might not even need to have a person in the car...your purchases will come to you.

Already Jeff Bezos is pushing for "drone legality" in order to air mail any and all packages 5 pounds or less "autonomously." Since 90% of their order book is five pounds or less (and yes Amazon is already doing this in Canada where it is legal) talk about convenience.

Ask yourself this: how much physical mail do you get in a day? For me maybe a single letter. "And it can wait."

That would save 60 billion dollars right there.

Internet education? That would save hundreds of billions.

Escrava Isaura's picture

Disable says: "Internet education? That would save hundreds of billions.”

Agree, because I heard student loans are over $1trillion. But, from whom, would these billions of dollars saved, come from?

TheRedScourge's picture

Same place that savings from farm equipment came from; somewhere in the economy, at the expense of some jobs, but to the vast benefit of everyone else. No problem if people are willing to retrain for another career (pretty much have to every decade now anyway).

WeNeedaRealGovt's picture

Commercial effeciency increases are staggering and the sheer number of business that have upgraded since 2000 - and increased since tax benefits enhanced - can account for a lot of this.

Further, if you want proof, just look at the amount of energy needed to power a single LED vs traditional bulb.  Commercial business have adopted this as major policy and benefited.

Only reason to deny this is for political purposes, and anybody not aware of this only looks for reasons to justify their political beliefs.

US leads the world in electrical engineering research.

barre-de-rire's picture

your drone amazon delivery is fun & nice on the paper.. as a full mind french, i got a  couple of questions for the drone delivery...

 

1) you dont have garden to land the bot, you are in the middle of a 15 stage building, bet the drone do not cross windows... no acces to roofs, you go down & take delivery close people on the sidewalk ?

2) you have 75 years old + you prefer physical delivery, the way amazon  push concept =  no more postal human activity at all, will the grany beat the propellers with the rod  to stop it ?

3) aerian control over city to security ? about close airport ? civilian casualties in a windy condition pushing the bot on the tree, electrical cables, phone cable ? battery low ?

4) warehouse is not 10km away but 50km ( example ) do bot will do like electric car & wait 8hours to full charge to go forward ? ( battery weight ? autonomy ? )

natural ressources all over the planet to keep putting ALL FUCKING MACHINERY & DEVICES ON ELECTRONICS ??? i mean wtf ppl no more knowing how manualy sharpen a fucking knife on a kitchen... the day of the massive off grid solar erruption , 95% humans go panic to death coz of unability to revert manual jobs.

 

 

 

msmith9962's picture

Taught my kids to read a map on the family trip last week. They will know how to read a map dammit!

Edge.case's picture

You're expecting the usps to take advantage of an efficiency opportunity?

Ha ha

malek's picture

You are full of preconceptions on LED lighting and have mostly no clue what you're talking about.

LED lamps have reached fantastic efficiency, the light color is very good, instant full light intensity when turning on, no mercury is set free when you drop one, and they pretty much don't care about switch cycles regarding life expectancy.
Get a Kill-A-Watt (or similar in Canada) and measure yourself before spouting nonsense about energy use / efficiency.
And why do you think cities are exchanging their street lights with LED type ones?

ATM's picture

Because they get incentived to switch and not because LEDs make economic sense. If they did (i.e., everyone would buy them as the better, cheaper alternatve rather than as an expensive waste of money), we would all have LEDs lighting eveything already. Sort of the same idea with Elon Musk's tax credit trading company that happens to make a fabulously expensive electric car too. Without government intervention the market would have already determined the idea of a six figure electric vehicle was a bad sideshow and relegated it to the dust bin.

But we live in a world of government intervention. Too bad for us since there are history books filled with the disasters created under such systems, but this time is different. They know what they are doing......

malek's picture

The past is no indication of similar future results.

In less than 5 years we will be using pretty much LED lights only everywhere, because they economically make sense. (This is already true for standard size low output bulbs up to 40W equivalent incandescent.)
Fluorescent and incandescent will be like phones with spin dials.

Stuck on Zero's picture

Energy improvement in consumer items???  No way.  There are so many frickin electrical vampires around the house now drawing their milliwatts each that demand is up.  TVs, set-top boxes, disk driver, modems, microwaves, stereos, phones, ovens, etc. all draw loads when they are essentially off.  I don't know about you but I can navigate around the house at night from just the LEDs in all the appliances.