Ask FRED

FRED is the uncle in St. Louis who is sharper tongued and better dressed than Uncle Willie who works downtown at the NY Fed.

Every day, FRED publishes the most recent and authoritative economic data and time series pertaining to industrial production, prices, and employment, interest rates and more. It is a trove that can be searched for specific information or trolled for insights and amusement.

What is FRED saying today?

Industrial production is expanding at a 1.4% pace, declining from the 3+% of the prior three years. The simple question is whether production will revert to the higher mean levels of earlier cycles or will slip into negative, recession territory. The inflation, employment and interest rates are moderate, meaning they do not foreshadow a major shift in economic behavior.


Neither FRED nor I see a recession on the horizon.

Election year rhetoric suggests otherwise. The Republicans would, through both policy and style, upend generations of progress in international trade, upsetting a main contributor to the indulgent American lifestyle. The Democrats join the Republicans in condemning trade but add that a more equitable distribution of income would be a good thing.

Unlike FRED, I agree with the Democrats on the income thing but disagree on trade issues. That said, I’m not much concerned since I think it unlikely that even The Donald will be unable to undermine to the principles of relative advantage and comparative growth rates that drives trade and productivity.

So, all good?

Industrial production will continue to expand at least until inflation is evident, which is unlikely at least over the next 6, maybe 12 months. Still, the stock market usually leads industry activity and a decline in stock prices is possible.

There is historic parallel for the de-coupling of industrial production and rates. The accelerating market decline of 2000-02 was preceded by below trend industrial growth. The pattern recurred as the 37% S&P 500 decline of 2008 was followed by lower industrial production in 2009

The greater probability is that stocks will tread water until it becomes apparent that gains in activity and productivity, the stuff of GDP, will push GDP to historic growth levels and that the supposed new normal of lower growth is just a passing phrase.

BizProf100

Data source and suggestion:
https://research.stlouisfed.org/fred2/
http://www.tradingeconomics.com/united-states/gdp-growth-annual