Rebel Capitalist: Was the Recession Just Canceled Due to This?

The past few weeks have seen rising fears of a recession hitting the United States. Those predictions are based on the continued weakness in consumer spending. But other factors, like shrinking the size of government, can also play a key role in a slowdown in GDP.

However, some private sector data continues to look attractive. And several indicators show that the economy could continue to fare well. The prior week’s consumer and producer inflation data, for instance, showed that stagflation was less likely.

A new data piece this week on U.S. industrial production is also bullish for the economy. Simply put, industrial production rose 0.7% month-over-month, far better than the 0.2% expectation.

More importantly, U.S. industrial production is at an all-time high. Historically, there has never been a recession when production is at an all-time high. It needs to come down first before the rest of the economy slips into a recession.

Obviously, that doesn’t necessarily mean that a recession is cancelled. But it’s a strong data point that makes it unlikely.

And booming production suggests that the economy is still expanding. That’s bullish for the market. It suggests that stocks could still recover from their recent selloff and make new all-time highs this year.

There may still be increased uncertainty and volatility, but overall data isn’t as bad as it looks.

To see the full explanation behind industrial production’s role in the economy, click here.