Federal Reserve Capacity Utilization Index: Graph of the Week 8/20/2012
The Graph of the Week is back from its summer hiatus, with a look at the Federal Reserve Board's Capacity Utilization Index from January 1980 through July 2012. The Index, with a value of 79.3, was released this past Wednesday by the Fed, along with its companion stat, the Industrial Production Index.
According to the Fed's website, "The capacity index, which is an estimate of sustainable potential output, is also expressed as a percentage of actual output in 2007. The production indexes are computed as Fisher indexes since 1972; the weights are based on annual estimates of value added. The rate of capacity utilization equals the seasonally adjusted output index expressed as a percentage of the related capacity index.
Over this time period, the mean capacity utilization rate was 79.5%, with its maximum being 85.2 in January 1989, which just happened to be the last month of the Reagan presidency, or the first month of George H.W. Bush. Even during the extremely low unemployment during the Clinton Administration it never quite regained that level. The lowest it has even been was June 2009 when it dropped to 66.8. Note that it has almost recovered to the 1980-2012 average.
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