Taps Coogan – February 25th, 2021

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US capacity utilization, a measure of the percentage of the nation’s total industrial production capacity that is being utilized at any given moment, has clawed its way back over 75% in January according to recently released data. That brings it to levels seen back in 2016.

The recovery in capacity utilization to pre-Covid levels, which we anticipated back in June, highlights the peculiar nature of this recession. Demand for manufactured goods has actually been strong as consumers have shifted spending, boosted by stimulus checks and expanded unemployment insurance, away from services into goods.

Nonetheless, the long term trend of declining industrial capacity utilization, which has been in place since the mid 1970s, remains intact. Persistently low capacity utilization is one of the key challenges holding back capital investment and productivity growth in the US.

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