Newspaper article International New York Times

U.S. Output Makes Up Lost Ground

Newspaper article International New York Times

U.S. Output Makes Up Lost Ground

Article excerpt

The Federal Reserve's report on industrial production this past week shows the United States as a standout among the advanced economies.

Industrial production in the United States has returned to its prerecession level, nearly six years after the downturn began and more than four years after the recession officially ended.

The Federal Reserve reported in the past week that the index of industrial production rose to 101.28 in November, a gain of 1.1 percent from October. It was the first time the figure had risen above the 100.82 level of December 2007, the month the recession officially began.

Such a performance is hardly impressive, given that before the current cycle the only times industrial production did that poorly over such a period was during the Great Depression and in the years after World War II, when the country was demobilizing and ending or sharply reducing weapons production.

But it stands out among advanced economies, as can be seen from the accompanying charts. The latest composite figure for advanced economies shows production at about 7 percent below the predownturn level, a level that has not changed much since 2011. Moreover, the recovery seems to have halted in Germany, while the decline has resumed in some of the less competitive euro zone economies.

A significant part of the United States recovery is a result of increased energy production related to the boom in shale gas production, which has driven down the price of natural gas. That price decline, in turn, has helped increase production in other areas, where lower energy costs improve the competitiveness of American companies.

Over all, production of business equipment fell much more rapidly than did production of consumer goods when the recession was at its worst. But since then business equipment has recovered fully, while consumer goods are still being produced at a rate below that of 2007. …

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