Support the Wall Street Examiner! Choose your level of support to receive a free proprietary report as my thanks. Click the button below to see your options. Become a Patron!

Industrial Production Up 3.2%, But 2.5% Ex Raging Energy Boom

The Fed’s actual, not seasonally adjusted (NSA) Industrial Production Index was up 3.2% over the past 12 months after declining by 2.1% in April from March. The prior 10 year average decline for the month is -1.7%. Last year, the April decline was only 1.1%.

This year’s April performance was worse than both last year and the 10 year average. However, the current number may have been a giveback for a much stronger than average performance in March, which had a 1.5% gain against a 10 year norm of a decline of 1.4%. The yearly rate of change at +3.2% is consistent with the growth rate of the past 3 years.

The industrial production index is based on units of production and therefore need not be adjusted for inflation. As I have shown in a prior analysis, the gains have been skewed by energy production. If those components are removed, net industrial production ex energy remains below 2007 peak levels. Ex-energy industrial production rose just 2.5% over the past 12 months. The growth rate has been declining since 2010 in spite of all the Fed’s money pumping… Or because of it because it encourages financial engineering at the expense of real investment!

Industrial Production Ex Energy- Click to enlarge

Industrial Production Ex Energy- Click to enlarge

Perhaps the biggest question is, “Can the energy boom be sustained at this pace?” I think the answer should be obvious.

Energy Boom or Bubble- Click to enlarge

Energy Boom or Bubble- Click to enlarge

And the next question is, “What happens to the US economy when this begins to moderate?”

Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.