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 photo percapitaindpro_zps66f629b8.png

BTW don't tell me we are a services economy because you have to have high quality affordable education, health care or security to be a services economy.

Nor do recent gains in per capita industrial production (see my last blog for definition) necessarily indicate the trend for 2014 because 2013 was the year of fracking and its eerily similar financial equivalent - quantitative easing.

U.S. oil production exceeded 7 million barrels a day for the first time since March 1993 as improved drilling techniques boosted exploration across the country and reinforced a shift toward energy independence.
Fracking is likely a short term solution.
Hughes has predicted that production will peak in 2017 and fall to 2012 levels within two years.
Though by 2017 America may be using less oil.

As impressive (and potentially environmentally hazardous) as fracking is on the production side of INDPRO, so too is QE (and potentially morally hazardous as it pays off banks for somewhat criminal loans) on the consumption side (or at least for Americans owning real estate and stocks anyway)

 photo QETimelineSept2012_zps20ed6d4e.jpg

But it is equally recognized that QE can't continue forever

According to NASDAQ.com, this is effectively a stimulus program that allows the Federal Reserve to relieve $40 billion per month of commercial housing market debt risk. Because of its open-ended nature, QE3 has earned the popular nickname of "QE-Infinity." On 12 December 2012, the FOMC announced an increase in the amount of open-ended purchases from $40 billion to $85 billion per month.

On 19 June 2013, Ben Bernanke announced a "tapering" of some of the Fed's QE policies contingent upon continued positive economic data. Specifically, he said that the Fed could scale back its bond purchases from $85 billion to $65 billion a month during the upcoming September 2013 policy meeting. He also suggested that the bond buying program could wrap up by mid-2014. While Bernanke did not announce an interest rate hike, he suggested that if inflation follows a 2% target rate and unemployment decreases to 6.5%, the Fed would likely start raising rates. The stock markets dropped approximately 4.3% over the three trading days following Bernanke's announcement, with the Dow Jones dropping 659 points between 19 and 24 June, closing at 14,660 at the end of the day on 24 June. On 18 September 2013, the Fed decided to hold off on scaling back its bond-buying program.

For both oil and financials the long term has to be to stop using unsustainable resources like petroleum and loans to workers with declining wages.

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Comment Preferences

  •  Does mineral extraction count in the (1+ / 0-)
    Recommended by:
    kurt

    "industrial production" category?

    That wasn't really clarified in your conflation of fracking and "making things" . . . ..

    In any event, fracking almost surely dampens per capita productivity stats because it is a rather labor intensive, inefficient way to extract petroleum (or NG).  Plus the fracked oil has to move to markets by rail because pipeline capacity out the Bakken is highly constrained - again, rail is less productive than pipelines so it will make your stats look bad.

    OTOH, those factors increase employment - so if you're a "people person" (rather than a robots-making-things person), that's probably good news.

    •  Yes and no (1+ / 0-)
      Recommended by:
      Roadbed Guy

      Yes petroleum is part of INDPRO - http://www.federalreserve.gov/...

      No the increase in industry hiring is not enough people to account for more than 0.2% change in labor statistics:

      From the start of 2007 through the end of 2012, total U.S. private sector employment increased by more than one million jobs, about 1%. Over the same period, the oil and natural gas industry increased by more than 162,000 jobs, a 40% increase.
      •  My point wasn't that ALL jobs were created (0+ / 0-)

        by oil and gas extraction - just that * some * were - and however many that "some" was, it was more than would be expected on historical norms in this sector (and thus made the stats in this diary look "bad").

        For example, there are three large rail car factories that have come on line in the past three years to produce rolling stock for moving crude oil.  All of that creates at least a smattering of jobs that wouldn't otherwise exist, and in the process reduce the nominal productivity of the overall system.

        •  Unless I misunderstand the chart, it displays (1+ / 0-)
          Recommended by:
          disrael

          the ratio of industrial production to the total population, not to the number of hours worked by people. If that's the case, your assertions don't apply.

          To put the torture behind us is, inevitably, to put it in front of us.

          by UntimelyRippd on Wed Jan 01, 2014 at 08:40:01 AM PST

          [ Parent ]

  •  I think there is more going on here (1+ / 0-)
    Recommended by:
    disrael

    http://www.advisorperspectives.com/...

    http://www.advisorperspectives.com/...

    Gas usage is slowly falling.  

    I think its related to changing how we live and the end of the suburb as our cities recover and we build more mass transit.  

    I'm a 4 Freedoms Democrat.

    by DavidMS on Wed Jan 01, 2014 at 08:28:56 AM PST

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