From: http://www.federalreserve.gov/releases/g17/Current/
Industrial production increased 0.5 percent in July. Aside from a hurricane-related rebound in October 2008, the gain in July marked the first monthly increase since December 2007. Manufacturing output advanced 1.0 percent in July; most of the increase was due to a jump in motor vehicle assemblies from an annual rate of 4.1 million units in June to 5.9 million units in July. Excluding motor vehicles and parts, manufacturing production edged up 0.2 percent. The output of utilities fell 2.4 percent, reflecting unseasonably mild temperatures in July, and the output of mines increased 0.8 percent. At 96.0 percent of its 2002 average, total industrial production was 13.1 percent below its level of a year earlier. In July, the capacity utilization rate for total industry edged up to 68.5 percent, a level 12.4 percentage points below its 1972-2008 average.
Since everyone is looking for green shoots, some folks may greet the increase with great fanfare. When you view the information graphically, it is easier to depict further declines as opposed to the development of a base.
As cash for clunkers expire, so will the demand for autos. By the way, if the individuals that purchased vehicles under this program utilized credit for their purchase, the overall spending situation only becomes worse. The consumer is tapped out. Their commitment to additional payments will only reduce their future capacity to help get the economy moving again. There have also been accounts where purchasers were so naive that they were overpaying for the vehicle due to the subsidy. In essence the cash for clunkers did not completely support the purchaser, but it went to other parties.
Hang tight, the potholes in the road are increasing!
Copyright 2009 - Jim Lindell
Chart from the Federal Reserve: