On Friday, September 15, 2017, CNBC posted that for the first time since January, the industrial production has fallen. Overall the industrial production has fallen about 0.9% since it was updated at the end of July. One of the main causes of this could be Hurricane Harvey, which has hit the oil, gas and chemical industries hard along the Gulf Coast.
To back this data up, the Fed used a combination of high frequency plant data and economic modeling. Thus far, there is nothing to dispute otherwise that the industrial production has been slammed as a result of the massive hurricane that has hit much of the southern part of the United States. What makes this data much more interesting is that there was supposed to be an increase in production even with the hurricane hitting.
The oil, gas and chemical industries are not the only ones that took a hit as a result of the declining production. Mining has also decreased about 0.8% since the end of July. Some of the industries are still on the rise as a result of the hurricane. For example, the auto parts and vehicles rose 2.2% this past month.
The biggest concern for our economy now is how the United States will bounce back and what industry will be hit next as a result of the multiple hurricanes that have hit. Some have had a serious decline in production while others have had an incline in production. Hopefully, the next will be a step in the right direction for the United States economy.
https://www.cnbc.com/2017/09/15/industrial-production-fell-0-point-9-percent-in-august-vs-0-point-1-percent-increase-expected.html
The consecutive hurricanes indeed contributed a severe blow to our southern industries. It doesn't help that a few of these industries are headquartered in the South (BP,Delta, American Airlines). I think the reason for the increase in automobiles is because airlines have been forced to cancel flights and shut down operations. After reading your article, I have a few questions:
ReplyDeleteWhat percentages do these industries (that you mentioned) contribute to our overall GDP?
How can we increase these industries' production in the future?
It will be interesting to see what happens to industrial production after all these hurricanes have stopped. There was a lot of damage especially to the sectors that you talked about in the article but I think there will be an increase in production in the near future. Some of it could be due to help clean up the destruction and another could be just to revive the economy in those areas that got hit and get it back to where it was before the hurricanes.
ReplyDeleteAs you guys have commented, this could definitely help the clean up after the hurricane. It will be interesting to see how they will help revive the economy in terms of those certain industries. That being said, I do not think it will be an easy task. I think they will try to increase production by hiring more workers, which could lower the wage but it will hopefully lead to more production in the industries that have suffered from the hurricane.
ReplyDeleteInteresting thought, I do agree that it will somewhat clean up after hurricane. Many of the industries are going to need a lot of time to get back to where they were before the hurricane hit
ReplyDelete