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Industrial production is steadily improving





Industrial production has been rising at a fairly rapid 6-8% pace since the middle of last year, and that is undeniably good news. It still has a ways to go to recover fully, but at this rate we'll get there by next summer. Although the pace of growth in industrial production is quite strong from an historical perspective, the depth of the recent recession would normally have called for much stronger growth and a faster recovery. That this hasn't happened explains why everyone is so gloomy these days, despite the glaring evidence that things are definitely improving. There is still a lot of "idle capacity" in the economy, from under-utilized plant and equipment to millions of workers without jobs. It's going to take a lot of time to get all that back to work, because in the meantime the economy needs to do a lot of adjusting to new realities—for example, among other things, we have to shift resources from homebuilding to whatever the next big boom industry is going to be (wish I knew). This is an ongoing process, but it takes time to become obvious.

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