Comments on June Industrial Production

The Federal Reserve has issued its first estimate of June industrial production. Outside of a rise in output of utilities, which of course means almost nothing for the trend of general economic output, there was no special good news here. Here is the link: INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION. Wall Street cheerleading aside, the two stock market leaders for 2008 are strangely both flat (Wal-Mart) and down (McDonald's) today.
Financials are up, reflecting the massive subsidies the Fed and the Feds have provided to the big banks and brokerages.

The country is at levels of capacity utilization not seen since the Great Depression, it appears. Assuming that cyclical factors push the economy upward, it will take extraordinary effort on the part of the Fed and the Feds to create a significant debasement of the currency (i.e. inflation) over the short term. Here is a portion of the first table in the Fed's release. Compared with 2002 (a weak year for the economy), the index is 5% lower despite a population that is probably 7% larger. This is a miserable showing on a per capita basis and is the opposite of what is seen in secular bull markets, a la the 1950s.

2009						2009						June '08 to June '09
Jan.[r]	Feb.[r]	Mar.[r]	Apr.[r]	May[r]	June[p]	Jan.[r]	Feb.[r]	Mar.[r]	Apr.[r]	May[r]	June[p]
Total index	100.1	99.4	97.7	96.9	95.8	95.4	-2.2	-.8	-1.7	-.7	-1.2	-.4	-13.6
Previous estimates	100.2	99.4	97.6	96.9	95.8		-2.1	-.8	-1.8	-.7	-1.1
Major market groups
Final Products	103.4	102.8	101.6	100.6	99.4	99.0	-2.6	-.6	-1.2	-.9	-1.2	-.4	-10.7
Consumer goods	98.6	98.7	98.3	97.8	96.8	96.5	-2.0	.1	-.4	-.5	-1.1	-.3	-7.9
Business equipment	115.7	113.8	110.4	108.3	106.2	105.4	-4.2	-1.7	-3.0	-1.9	-1.9	-.8	-17.8
Nonindustrial supplies	94.7	93.2	91.3	90.5	89.7	89.7	-1.9	-1.5	-2.0	-.9	-.9	.0	-15.1
Construction	85.8	84.7	82.4	81.1	80.8	80.7	-3.7	-1.4	-2.7	-1.5	-.4	-.2	-20.7
Materials	99.0	98.4	96.3	95.9	94.6	94.0	-1.9	-.6	-2.1	-.5	-1.3	-.6	-15.8
Major industry groups
Manufacturing (see note below)	97.8	97.7	96.0	95.4	94.3	93.8	-2.8	-.1	-1.8	-.6	-1.1	-.6	-15.5
Previous estimates	97.9	97.8	96.0	95.4	94.4		-2.7	-.1	-1.9	-.6	-1.0
Mining	102.8	101.1	98.4	96.3	94.4	94.0	-.6	-1.6	-2.7	-2.1	-1.9	-.5	-10.4
Utilities	111.5	106.4	106.1	105.8	104.4	105.1	.2	-4.5	-.3	-.3	-1.3	.8	-3.9

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