Retail Sales and Industrial Production

Two sides of the economy are telling different stories

After an unprecedented drop in retail sales earlier this year, the pandemic showed us that the American drive to purchase things is mightier than any deadly virus:

While retail has cooled somewhat recently, it remains near long-term average levels. Industrial production, however, is still well off the pre-pandemic normal:

Capacity utilization offers another look at production and shows us what portion of total available production capacity is in use. It’s not looking too great either:

The good news is that industrial production is a small part of the overall economy. Consumption is about 70%. So, you would much rather have strong retail sales and weak production than the other way around. What will be intriguing from here is whether the strong shopper can continue to hang on and avoid a post-holiday hangover.

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