Considering the heightened uncertainty in global markets at the moment, today’s update on US industrial production for December looks ok. Although production slipped 0.1% last month vs. November, “warmer-than-usual temperatures reduced demand for heating” and translated into “a sharp drop in the output of utilities,” the Federal Reserve advises. As a result, industrial production ex-utilities posted a healthy 0.7% increase last month. Note too that manufacturing activity–the main component in industrial activity–expanded 0.3% in December, according to the Fed.
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The world needs more inflation and if it doesn’t get it–soon–the slow burn of disinflationary pressure may tip over into outright deflation. It’s another wake-up call for central banks, which is another way of saying that the blowback of the Great Recession is still with us. Back from the dead? In fact, D-risk was never stamped out entirely; rather, it was only tamed. But the virus of falling prices has found renewed strength, which means that the global economy needs another dose of anti-viral medication.
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● IMF Chief Says Global Recovery Faces Strong Headwind | RTT
● Euro zone Dec prices fall confirmed ahead of ECB decision | Reuters
● U.S. jobless claims rise to four-month high | Reuters
● U.S. Producer Prices Fall by Most in Three Years | Wall St Journal
● NY Fed Empire State Manufacturing Report: Activity Expands | Bond Buyer
● Philly Fed: Manufacturing Activity Grows at Weaker Pace in Philly Region | AP/ABC
● U Consumer Confidence Increases to Highest Level Since July 2007 | Bloomberg