Industrial production is still declining, bad news for unemployment

Posted Jul 15th 2009 1:00PM by Connie Madon
Filed under: Products and Services, Economic Data, Personal Finance

Let's not be confused by the numbers. Industrial production is still declining. What does that mean? It implies that demand for goods and services still has not picked up. This number does not bode well for unemployment. We need more production to put unemployed workers back to work.

Just look at the numbers:

Industrial production fell 0.4% in June, the slowest in eight months. In may the decline was 1.2%.
Output fell 11.6% in the second quarter, compared with a drop of 19.1% in the first quarter.
For the year auto and auto parts production fell 32.5%

Major household goods fell by 21% over last year.
The consumer price index rose 0.7% in June, with 80% of the rise coming from an increase in oil and oil products.
The gasoline index rose 17.3% in June, compared with a rise of 3.1% in May.
Core CPI numbers are meaningless because they exclude food and energy. They were up 0.2%.

Why would you exclude food and energy from the CPI? The reason is simple. Social Security payments are tied to the cost of living as measured by the CPI, the "core" CPI. So if the government had used the true numbers all these years, seniors would have received payments equal to the true cost of living, not this watered down number, by taking out food and energy.

So, until industrial production picks up, it's unlikely that we will see a major improvement in hiring. Let's hope next month brings better news.

Do you see industrial production picking up in your area?

Tags: industrial production, IndustrialProduction, inthenews