Going Down Fast

By Charles McMillion

Created 10/16/2008 - 10:54am

Summary:

Four important economic reports today show the real economic downturn is worsening very rapidly. This is why strong, informed leadership matters.

Four important economic reports today show the real economic downturn is worsening very rapidly.

The Federal Reserve reports [1] that industrial production plunged 2.8 percent in September following a plunge of 1.0 percent in August. The plunge in industrial output in September is the worst one-month loss since December 1974 as the first OPEC oil-price hike devastated U.S. industry. Part of the September shut-down was the result of Gulf Coast storms, but even with the far greater devastation of Katrina, output fell only for one month and that was a 1.8 percent decline in September 2005.

Indeed, industrial production (which includes mining and utilities as well as manufacturing) has now plunged in seven of the past eight months and by 4.5 percent yr/yr. Over just the past three months (July to September) U.S. output plunged by 3.8 percent; again the worst three month plunge since early 1975 and one of the worst in U.S. history. Manufacturing output plunged by 2.6 percent in September, the worst one-month plunge since May 1980, when the Federal Reserve slammed on the monetary policy brakes, sending interest rates skyrocketing. Manufacturing production has fallen in six of the past eight months and by 4.8 percent year over year.