Capacity Utilization Trend: Is This a “Scary Graph”?

When I first discovered the Calculated Risk Blog, among my first thoughts was: “I should show people these graphs, because they’re really scary.” This was because CalculatedRisk often depicts economic data extending a half-century into the past, and when you look at those graphs, the pattern isn’t always pleasing, for our nation’s future, for our children’s future.

For example, here’s a plot from Friday’s article Fed: Industrial Production decreased 0.6% in March:

20160415_crb_caputil

The long-term trend implies that after each recession, capacity utilization in the subsequent recovery never reaches the peak from the preceding recovery. This makes me wonder, though: as technology and society change, doesn’t the ruler for measuring capacity and its utilization have to change?

I wonder if this graph indicates genuinely decreasing capacity utilization as the decades proceed, or if it might only represent the Government’s inability to adapt its system of measurement, its ruler, to reflect a changing world…

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