Federal Industrial Output Skyrockets In 101 Year High

(PresidentialInsider.com)- Automobile production fueled a new all-time record set in industrial activity in the United States.
Late last week, the Federal Reserve reported the monthly gauge of industrial activity ended up reaching the highest level its ever reached in more than 100 years of the central bank conducting the index.
In March, the index for industrial production as reported by the Fed increased all the way to 104.6, which represents a bump of 0.9%. That’s a pretty impressive increase, especially considering Russia’s war in Ukraine and ongoing shortages and disruptions in the supply chain are driving down production and driving up prices.
This particular index measures the amount that industrial output has either decreased or increased compared to the average in a specific year. The year it’s currently being measured against is 2017.
In other words, the current index of 104.6 for March means that production that month was equal to 104.6% of the level in 2017 for that same month. That’s the highest such level the Fed has reported since it first began conducting this calculation way back in 1919.
As tax firm RSM’s economist at audit, Tuan Nguyen, commented recently on the index:
“The strong performance of the industrial sector should give gross domestic product growth in the first quarter a needed boost, especially with consumption hampered by elevated inflation.”
This boost in industrial production was certainly a surprise, and a welcome one at that. In fact, it’s one of the few recent positive signs for the American economy, as pries for commodity crops, gas, oil, minerals and many other resources have skyrocketed.
The supply chain was already quite bogged down. But, in recent weeks, China has shutdown many major cities due to new COVID-19 outbreaks. And, trucks that have been entering the U.S. from Mexico through Texas have faced new and enhanced inspections.
That has put even more pressure on the supply chain, contributing to inflation being the highest it’s been on an annual basis since the early 1980s. As a result, many economists have wondered whether the Fed might need to raise interest rates so high that it would slow the U.S. economy significantly enough just so inflation could be curbed.
But, as Nguyen wrote in his note following the release of the index:
“The void in global and domestic demand, especially in energy and raw production materials as a result of the war in Ukraine, might have given American producers the opportunities to increase production.”
The largest yearly increase among all the manufacturing industries came in automobile production. Domestic auto makers saw an increase of 7.8% for March.
The largest gain for commodity producers came from miners, who reported an increase of 1.7%.
Nguyen concluded:
“The total number of vehicles produced in March reached 9.75 million, the highest since January last year. But, auto production remained subdued compared to pre-pandemic levels as manufacturers continued to face a shortage of chips.”
While this is certainly welcome news, it’s only a blip on the radar compared to all the negative news about the economy under President Joe Biden.