Twice a year, The Raff Report looks
at the trends for installed capacity and capacity utilisation for US raw
materials and apparel. Changes in capacity utilisation signal changes in the
strength of US manufacturing. These changes have implications for employment,
goods prices, and inflation. A change in installed capacity has implication for
the trade balance, competitiveness, employment, and a host of other
matters. Here’s a taste:

…it seems that US
capacity utilisation seems unlikely to rise to past highs and this should help
prevent a sharp decline in the unemployment rate and so help keep inflation in
check. Perhaps the trend in capacity utilisation is one of the reasons that the
Federal Reserve is signalling that the cycle of rising interest rates is near an
end.

…Despite a sharp recovery from
the 2001 recession, and solid growth in manufacturing since then, some of the
raw materials sectors, notably metals, recorded falls in installed capacity, and
this has been the trend for several years. This trend will help boost imports
of raw materials and/or semi-finished and finished goods. Shrinking violets
include primary metals, oil and gas extraction, plastic and rubber products,
electrical equipment, machinery, and paper.

…it seems that the US will
need increasingly compete with emerging economies for secure supplies of certain
raw materials.

Read on at Henry
Thornton.