by Calculated Risk on 11/17/2009 04:54:00 PM

Earlier I posted a graph on capacity utilization: Industrial Production, Capacity Utilization Increase Slightly in October

Spencer at Angry Bear is tracking the recovery in industrial production compared to previous recessions.

As the chart shows, this changes the impression the previous reports had given that this was a normal to strong recovery in industrial output to one that it is a weak recovery.

Click on graph for larger image in new window.

Graph from Spencer.

It is too early to tell, but those expecting a "V" shaped recovery would expect industrial production to be tracking at or above the "severe recessions" line (since this was the worst recession since the Depression).

Before reading too much into this graph, Spencer cautions that an upward revision to Industrial Production is likely:

Much of the initial estimates of monthly industrial production data is based on electricity consumption data. However, the national average temperature days for October 2009 were extremely low at only 50.8 degrees Fahrenheit. In a quick check of my data base this is the second lowest October reading on record going back to 1921. The lowest was 49.4 degrees in 1925 and the only one I saw below 50 -- the highest was 60.0 in 1963. The norm is around 55 degrees so the October temperature days was some 10% below normal. This strongly implies that the electricity usage would have been significantly below normal in October and consequently the industrial production data estimates are undoubtedly biased downward.