US Capacity Utilization Trend – are we there yet?
We’re at ‘peak employment’ but CU trend shows lots of slack in the economy still, also as evidenced by the Labor Force Participation rate at around the 70’s 63%.
“Capacity Utilization is the percentage of resources used by corporations and factories to produce goods in manufacturing, mining, and electric and gas utilities for all facilities located in the United States……”. Basically CU goes down, inefficiency goes up & (US) economic strength diminishes.
Noteworthy in the chart below is 1) the consistent decline in the CU rate just prior to ‘official’ recession (this ‘tell’ isn’t here yet but there might not be one a la 2008), 2) the possible ‘stop’ points on the way down, and 3) similarity in long term declining trend to the Fed Funds rate which is hovering not far above zero and which is also at the top trend line (the ‘keep-the-wheels on’ line).
Courtesy Macrotrends
https://www.macrotrends.net/2585/capacity-utilization-rate-historical-chart
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Other (40) current related employment charts.
https://www.zerohedge.com/news/2018-09-09/us-job-market-overheating-xxxx-charts
NAIRU – “…….the specific level of unemployment that is evident in an economy that does not cause inflation to rise. NAIRU often represents equilibrium between the state of the economy and the labor market…” i.e. The STIFF’s and TPTB are at maximum contentment.
The Happiness Factor – A 5th Grader’s Forecast for US Employment 2017
Fed Funds Rate trend line – efforts of Fed to ‘keep-the-wheels-on’ with inflation existent but under control. Note that peaks resolve in crisis but the controlled devaluation of the USD (tool of choice) is still in place for now. They only have 200 basis points to work with.
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And of course the 100+ year Dow Gold Ratio – value of USD based assets vs. value of real money. I believe this inflation adjusted log chart discounts the influence of Fed and CB’s currency manipulation and if it’s true that there is no such thing as a free lunch, this line will be revert to the mean, possibly soon. Consider for a moment what affect that blip in 2016-2017 had on gold prices/stocks and where we are currently at.
Some great info there. Thanks YYZ.
I agree. Thank you.
Yes thanks YYZ
Good to see you