When the mainstream media feeds us
economic statistics, they generally reference year-over-year or
month-over-month changes, totally ignoring how current levels compare to
historical levels.
One key measure of economic health
is industrial capacity utilization. While manufacturing is less important
to the U.S. economy than it was two or more decades ago, it sill provides us
with a bellwether for the overall health of the economy.
Let's
open with a brief definition. Capacity utilization is defined as the
rate at which the United States economy is using the productive capacity that it has. It basically describes the amount of slack in the economy at a given point in time as a percentage of total potential output.
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