In October the industrial production plunged by the largets amount in nine months. This drop was led by electricity, gas, auto and housing weakness. The Fed said that output at the nation's factories, mines and utilities fell by 0.5% last month. Manufacturing output fell by 0.4%. Output at the nation's utilities was down 1.6%. Mining output, wich includes oil, fell 0.6%. Due to the declines the factories, mines and utilities were left operating at 81.7% of capacity, down from an operating rate of 82.2% in September.
The sharp plunge in electricity and natural gas output was due to the warmer-than-normal weather. Also contributing was the third straight drop at auto factories, who are facing slumping demand in the face of soaring gasoline prices. And everything related to the housing dropped aswell.
The Fed chairman Ben Bernanke sought to lower expectations for further rate cuts to boost economic growth. This could happen as soon as their next meeting on Dec 11.
This is once again a setback for the american economy but it could be predicted cause this is the lag of the crash in the housing market and the problems with the oil. But if the Fed can stop this decline by cutting the rates again then the economy will be in good shape again. Because a low dollar has had its advantages for America and Europe. So if they can keep the dollar at this rate and keep the economy steady for a while they could do some good things like lowering the trade deficit, ...
But offcours they do have to keep a close eye on the economy. But there are already predictions of a recession.
Nico Cottry
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