September proved to be a good month for US Industrial Production (manufacturing, mining, and electricity generation). The index increased 0.57% from August, which was both better than average and the best September performance in four years. Our rate-of-change analysis shows that the annual growth rate should be picking up from today’s 2.4% as we move through the last three months of data for 2013.
You may remember that ITR Economics has long been forecasting a 3.0% growth rate for the year (median estimate). Business-to-business activity, prevailing consumer trends, and global demand all bode well for a positive end to 2013.
A recent print edition of USA Today had a front page article about the US economy getting slammed by the government shutdown based on a consensus view from economists. The article stated that many of them lowered their expectations for 2014 accordingly. Please remember that key leading indicators like the ITR Leading Indicator, the Corporate Bond Prices 12/12, and the Housing Starts 12/12, began pointing to a slower US economy in 2014 many months ago, long before the government shut down. These consensus economists are a little late to the party and you, my friends, are ahead of them all.
Plan on an off year in 2014, especially in the second half of the year. This is consistent with leading indicator input and with the average length of business expansions in the US since WWII as measured by the National Bureau of Economic Research (NBER). Given their determination of a June 2009 business cycle low, the next high would be expected in mid-April 2014. This is on target with the forecast estimate we put in place early this year.
