Wall Street may have hailed today's better-than-expected production data as a sign that the manufacturing sector is stabilizing, but that's simply not the case.
Factory output, the largest segment of industrial production, held steady this month after a continuous drop over the previous 10 months. But that was only the result of stepped-up auto production. However, US auto makers Ford and General Motors have already announced plans to idle plants. That means this type of strength in auto output won't last.
And the production of other goods keeps sliding. Production of computers, communications gear, and semiconductors fell 2.4% in July.
Total industrial production fell for the 10th consecutive month in July. And, industrial capacity use fell to 77% -- its lowest level since August 1983. That tells us workers still face layoffs and reduced work hours.
And as more workers lose their jobs or face pay cuts, consumer spending -- which accounts for two-thirds of the economy -- is placed in jeopardy. And if consumer spending topples, so will the economy.
