Having finally established that the economy of the “rising dollar” was appreciably worse than first estimated, we can turn our attention back toward figuring out what that means for the near future and beyond. According to the latest estimates for Industrial Production, growth has returned but in the same weird asymmetric sort of way that is actually common for the past decade. Year-over-year IP expanded by 1.5% in March 2017, the highest growth rate since February 2015 more than two years ago.
Though that sounds impressive, it says more about the decline than the rebound. As the Federal Reserve currently has it, the trough of what was surely a near-recession for US industry was March 2016. Extended declines like those in 2015 and 2016 have never before occurred outside of a recession. That doesn’t immediately propose one for that period, but it does highlight just much trouble the US economy had encountered by that point; it was a very serious matter, not the least of which due to the monetary component driving it.
That means exactly one year has passed since the low point of a significant downturn. A growth rate of 1.5% is, therefore, measly in comparison to past downturns where IP contracted for more than a month or two. After the dot-com recession, for example, one year after the trough in November 2001 industrial production had expanded by 3.4%, more than double the rate of the current “rebound.” After the 1990-91 recession, twelve months after the bottom IP had grown by 3.5%. And so it is for all comparisons where the current track is substantially below them all, including those of similar proportions (on the downside). It is far closer to an “L” shape than the normal “V.”
This is far from surprising, of course, as it suggests (very strongly) nothing has changed in the economy except an end to the latest lengthy contraction phase. This meandering of positive numbers is a regular feature of the post-Great “Recession” economy where symmetry is broken each and every time there is a slowdown or downturn of any scale and duration.
