Economic Collapse: Recession Looms After Industrial Production Data Disappoints

Economic-CollapseJanet Yellen and the ‘MIT Gang’ at the Federal Reserve are bragging about America’s business recovery, but new Industrial Production data shows the U.S. economy may be on the verge of recession.

Economists had low expectations for the August Industry Production report, predicting a 0.2% month-over-month drop in the total value of output produced by manufacturers, mines, and utilities. But the industries couldn’t even match those meager expectations. On Tuesday, the Federal Reserve reported that industrial output dropped by 0.4% last month, the sixth miss in the past eight months.

Industrial Production Chart

Source: Federal Reserve


Where did things go wrong? The Fed-fueled subprime auto boom is coming to an end. This month we saw the biggest month-over-month decline in auto assemblies since 2009, explaining much of the drop in industrial production. Without a steady stream of cheap credit, broke U.S. households cannot afford to buy vehicles.

Here’s why you should be worried: industrial production is widely considered to be a coincident indicator, meaning that changes in the levels of these indicators usually reflect similar changes in the economy. If the U.S. recovery is as strong as Janet Yellen is telling us, why are manufacturers dialing back output?

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