Wednesday, November 16, 2011

Capacity Utilization vs. Inflation

Marketwatch details:

The output of the nation’s factories, mines and utilities rose 0.7% in October, the Federal Reserve said Wednesday in another sign the manufacturing industry is still expanding.

The October gain was the biggest since July and was stronger than the 0.4% increase expected by analysts.

Source: BLS / Federal Reserve


  1. Nonetheless, it seems there must be something wrong with the 'excess demand as the cause of inflation' story, don't you think?

  2. An increase in capacity utilization is not necessarily caused by excess demand. It can also be caused by supply destruction and/or not enough investment.