Monday, March 15, 2010
U.S. Industrial Production Rises but Manufacturing Lags
Industrial production increased a mere 0.1% in February, but the crucial manufacturing sector fell by 0.2%, indicating that economic recovery is still sluggish. Manufacturing took a hit due to the major winter storms in February that temporarily shut down most of the Northeast. Some economists predict the manufacturing sector to rebound in March with businesses replenishing their inventory. However, as heard over and over again, the economic recovery hinges on consumer demand increasing.
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I agree with Taleb while saying that the economic recovery hinges on consumer demand and unfortunately that also took a hit due to the winter storms. We can't control the weather and even though we can prepare for production issues when it come to high levels of snowfalls consumer spending will always take a hit when there is inconvenient weather. I am sure that consumer demand was decreased in February and that has a stronger correlation with the speed of recovery than industrial production.
ReplyDeleteI would definitely say that the weather played a major role in the unwillingness to consume. It seemed to effect most industries the same and really put a stop to the recovery process. Currently I am a manager at Subway and we saw a major decrease in customer counts from last January and February. Even with the slight change in the temperature increased our customer counts over last years. In conclusion I do believe the economy is turning in the right direction and the change in climate will only help speed up this recovery process.
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