U.S. industrial production has grown by leaps and bounds compared to the Eurozone. The one bright spot in Europe is the U.K., where industrial production is up 2.5% in the year ended August. Japan's industrial production is down over 5% year to date.
Manufacturing production in the U.S. is up a solid 3.7% over the past year, and the production of business equipment is up by an even stronger 4.6%. These are real gains that point to at least a modest acceleration in overall GDP growth. This is terrific news.
By far the strongest sector of the U.S. economy is mining, shown in the first of the two charts above, which in turn is being led by the surge in crude oil production, shown in the second chart. The output of the mining sector is up over 40% since the end of 2009. This is nothing short of spectacular. Yet it's my impression that these gains have been given short shrift by most analysts. Oil and hydrocarbons in general are not favorites of the politically correct crowd—it's somehow sort of "dirty." But as Mark Perry and I've been saying for years, it's hard to over-estimate just how much the fracking revolution is impacting the overall economy.
Surging U.S. oil production, in combination with slowing growth in Asian economies, is finally working to push oil prices down. Crude prices have plunged 25% year to date! The U.S. economy is going to benefit broadly from a huge reduction in the real cost of energy, the first "lucky break" we've had since the Great Recession. Again, it's hard to underestimate the ripple effects of these very positive developments.
The only thing that poses a serious downside risk to the U.S. economy at this point is a widespread Ebola outbreak. If it weren't for that, we'd have clear sailing for the foreseeable future.
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