Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

5 of 7
BACKNEXT
Industrial Production
Industrial Production
Industrial Production (IP) is another measure of the economy that you can see and feel, because it is a measure of what we produce as an economy. It measures the output of tangible goods - a car is made, a gallon of oil is produced - showing changes over time.

Industrial Production may drop when circumstances get in the way of production. For example, extended car plant shutdowns resulted in IP plunging 1.8% in January. Car-related products were down more than a fifth that month alone.

In fact, the Big Three's struggle has led to plummeting production rates (not to mention mass layoffs). The U.S. produced 40% fewer automotive products in the last year, and 35% fewer in the fourth quarter of 2008 than the third quarter.

The last time production dipped dramatically was during the recession of the early 1990s. In the first quarter of 1991, automakers cut back production 7.5%, to levels of a decade earlier, in an attempt to even out inventories with sales. This time it's worse. Overall, the fourth quarter of 2008 saw a decline of 12.1%, nearly three times as big a drop as in the second quarter, and the worst of any point in the last three decades.

In brighter times, like the last few months of 1997 when most industry groups were growing, production is high. The fourth quarter of 1997 saw the strongest increase in output in recent history: a quarterly increase of 10.7%.

Pretty obviously, if a 12.1% decline in IP is equal to 0 and a 10.7% increase in IP is equal to 10, we're now at the very bottom of the spectrum.

Industrial Production: 0

NEXT: Home Prices

Last updated October 23 2009: 4:39 PM ET
Email | Print | Share  |  RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
More Galleries
Banned! 10 things you won't find in China China says it wants to open its economy more to the rest of the world, but Beijing keeps a tight grip on technology and access to media. These 10 items are still off limits. More
A morning at the AltSchool, an education startup that Silicon Valley is crazy about The AltSchool is a system of "micro schools" and an education software maker that has raised about $133 million from investors like Andreessen Horowitz and Mark Zuckerberg and Priscilla Chan's philanthropic fund. More
Coolest cars for $18,000 These are the best budget cars, according to the experts at Kelley Blue Book. More

Special Offer