Industrial Production

Industrial production is an awesome time series for a lot of different reasons.

First, it’s a really long trend for which we have monthly data. Very few financial or economic metrics that are still regularly produced have over a hundred years of history. It helps connect us with the past from an analytical perspective.

The next reason it’s cool to me is because it’s focused on real physical production in industries like manufacturing, mining, and energy utilities. My whole life I’ve been a numbers guy, working in front of a screen. I have an admiration for tangible work like this because I know how important it is and because I feel like I am so far removed it.

Finally, this metric has a clear relationship with the business cycle - in recessions, real output decreases. Indicators aren’t always so neat when it comes to complicated events like economic declines.

Putting it all together, having a long-term trend that is focused on real tangible production with a clean relationship to the business cycle is super useful as a gauge for the overall economy. I mean really, what’s not to like?

And, here is the metric on a change basis:

Please note that charts need a moment to load as there is a significant amount of data processing.