A Recession Indicator, Capacity Utilization, Business Inventories, Durable Goods, and Savings

The economy continues climbing back

So, we all know the recession has been over for a while (even if it may not always feel like it):

However, it’s one thing for a recession to be over (i.e., the economy is growing instead of contracting) and another thing for things to be back to normal. What we are seeing is that not only is the recession in the rear-view mirror but that the economy is showing signs of being back to levels not seen since before the recession.

This, for me, is sometimes hard to believe. But, consider utilization, which shows we are using the economic engine to almost a pre-pandemic capacity:

Business inventories, which grow over time, are in healthy shape:

And new orders for durable goods show continued demand for new stuff:

Meanwhile, the savings rate is starting to come down but the thought here is that all of this excess saving above pre-pandemic levels is just further gas for the engine of the economy once people get more comfortable spending:

We might see some choppiness for the delta variant but, as this is now our fourth wave, life with the virus is in itself a kind of new normal (sad as that may be) and the impact of each successive wave should be less drastic (as long as the waves aren’t severely more damaging…which remains a big what if).

So, if you are like me and feel that things aren’t quite normal, maybe the flip side is to consider just how much is still in the tank to keep this economic cycle going as the path of normalization continues.

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