The Fed released data for industrial production for August yesterday. The story in the media was that production had fallen by 0.1 percent in August, suggesting that the economy was slowing. Well, this is a case where more caution would be helpful. First, it is best to focus on the data for manufacturing. The other two components, mining and utlities, are very erratic. (Utility output tells you primarily about last month's weather.) Manufacturing output was unchanged in August. While this may not give a very different picture, it is worth noting that the Fed revised July's growth figure up from 0.1 percent to 0.4 percent. This means that the new report showed August output as being 0.3 percent above where we had previously believed July's output to be. I'm not saying that there has not been a slowdown in manufacturing (my guess is that there has been), but the latest data are far more ambigious than the headline number implies.
--Dean Baker
