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The Glacial Economy Recovery Capacity Utilization Falls & Still Below 80%
Confounded Interest ^ | 03/16/2012 | Anthony B. Sanders

Posted on 03/16/2012 12:04:56 PM PDT by whitedog57

Fed Chairman Ben Bernanke uttered these words earlier this week: “Despite some recent signs of improvement, the recovery has been frustratingly slow, constraining opportunities for profitable lending.”

Today, The Fed released the industrial production and capacity utilization. Industrial production was unchanged in February after having risen 0.4 percent in January. Capacity utilization for total industry edged down to 78.7 percent, a rate 1.2 percentage points above its level from a year earlier but 1.6 percentage points below its long-run (1972–2011) average.

Traditionally, The Fed watches capacity utilization as measure of economic growth. 80% is considered “the sweet spot” or goal. If capacity utilization exceeds 80%, The Fed is tempted to raise the Fed Funds target rate to cool down economic growth. When capacity utilization is below 80%, The Fed is tempted to cut The Fed Funds rate to stimulate economic growth.

The yellow bars indicate that the capacity utilization bottomed out at the lowest point since President Carter. The difference is that capacity utilization rose to 80% under President Reagan, but President Obama’s capacity utilization recovery has seemingly flat lined and can’t break through to the 80% goal. And this is in spite of a historic monetary easing from The Federal Reserve with their Zero Interest Rate Policy and massive Treasury and Agency Mortgage-backed Securities purchases.

And the 10 year Treasury continues to climb.

Even the Congressional Budget Office’s Real GDP forecast point to a downward trend in economic growth. This reminds me of Jeff Goldblum’s calling for the cycling down of the alien’s signal in “Independence Day.”

The long term trend for real GDP is slow by historic standards. And with a significant number of baby boomers retiring, there will have to be serious modifications to entitlement programs.

(Excerpt) Read more at confoundedinterest.wordpress.com ...


TOPICS: Business/Economy; Government; Politics
KEYWORDS: economy; gdp; treasury
Found this on Zero Hedge. Look at chart of historic GDP. We are sinking! The more government we get, the slower GDP gets.

This is NOT an economic recovery. It is a path to total government control.

Comrade!

1 posted on 03/16/2012 12:05:04 PM PDT by whitedog57
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To: whitedog57

Maybe we should start movig people to the moon, then if the earth gets uppity we can shove rocks back at them at 18,000mph.


2 posted on 03/16/2012 12:28:16 PM PDT by GraceG
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