US Economic Indicators: Resource Utilization November 3, 217 Dr. Edward Yardeni 516-972-7683 eyardeni@ Debbie Johnson 4-664-1333 djohnson@ Mali Quintana 4-664-1333 aquintana@ Please visit our sites at www. blog. thinking outside the box
Table Of Contents Table Of Contents Resource Utilization Rate (RUR) 1 RUR Components 2 RUR & Inflation 3-4 RUR & Profit Margin 5 November 3, 217 / Resource Utilization www.
96 Figure 1. RESOURCE UTILIZATION RATE* Resource Utilization Rate (RUR) 96 86 86 82 82 78 68 7 72 74 76 78 82 86 96 98 2 4 6 8 12 14 16 18 2 78 * Average of all industries capacity utilization rate and employment rate, i.e., percentage of labor force that is employed. Source: Bureau of Labor Statistics and Federal Reserve Board. Figure 2. LEI/CEI vs. RESOURCE UTILIZATION RATE 1.4 95 LEI/CEI Resource Utilization Rate* 1.3 1.2 85 1.1 1. 75 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 1 3 5 7 9 11 13 15 17 19 21.9 * Average of all industries capacity utilization rate and employment rate, i.e., percentage of labor force that is employed. Source: Bureau of Economic Analysis, Bureau of Labor Statistics, Federal Reserve Board, and Conference Board. Page 1 / November 3, 217 / Resource Utilization www.
1 Figure 3. RUR Components RESOURCE UTILIZATION RATE & ITS COMPONENTS 1 7 Resource Utilization Rate* Employment Rate** Capacity Utilization Rate 7 6 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 1 3 5 7 9 11 13 15 17 19 21 6 * Average of all industries capacity utilization rate and employment rate, i.e., percentage of labor force that is employed. ** Percentage of labor force that is employed. Source: Bureau of Labor Statistics and Federal Reserve Board. 98 Figure 4. RESOURCE UTILIZATION RATE COMPONENTS 96 76 72 Employment Rate* Capacity Utilization Rate 68 64 68 7 72 74 76 78 82 86 96 98 2 4 6 8 12 14 16 18 2 6 * Percentage of labor force that is employed. Source: Bureau of Labor Statistics and Federal Reserve Board. Page 2 / November 3, 217 / Resource Utilization www.
96 RUR & Inflation Figure 5. RESOURCE UTILIZATION RATE & CONSUMER PRICE INDEX Resource Utilization Rate* 15 Consumer Price Index Ex Food & Energy (yearly percent change) 86 5 82 78 68 7 72 74 76 78 82 86 96 98 2 4 6 8 12 14 16 18 2 * Average of all industries capacity utilization rate and employment rate, i.e., percentage of labor force that is employed. Source: US Bureau of Labor, Bureau of Labor Statistics and Board of Governors of the Federal Reserve System. Figure 6. CAPACITY UTILIZATION RATE & CORE PPI FINISHED GOODS 2 85 Capacity Utilization Rate 18 16 14 12 75 PPI Finished Goods Less Food & Energy (yearly percent change) 8 6 4 7 Sep 2 65 74 76 78 82 86 96 98 2 4 6 8 12 14 16 18 2 Source: US Department of Labor, Bureau of Labor Statistics and Board of Governors of the Federal Reserve System. -2 Page 3 / November 3, 217 / Resource Utilization www.
RUR & Inflation 98 Figure 7. EMPLOYMENT RATE & AVERAGE HOURLY EARNINGS 96 Employment Rate* 8 6 4 AHE Average Hourly Earnings: Production & Nonsupervisory (yearly percent change) 68 7 72 74 76 78 82 86 96 98 2 4 6 8 12 14 16 18 2 2 * Percentage of labor force that is employed. Source: US Bureau of Labor, Bureau of Labor Statistics. 15 Figure 8. AVERAGE HOURLY EARNINGS & CONSUMER PRICE INDEX (yearly percent change) 15 Average Hourly Earnings: Production & Nonsupervisory Workers CPI Ex Food & Energy 5 5 82 86 96 98 2 4 6 8 12 14 16 18 2 Source: US Department of Labor, Bureau of Labor Statistics. Page 4 / November 3, 217 / Resource Utilization www.
12 Figure 9. RUR & Profit Margin CORPORATE PROFITS MARGIN IN GDP* & RUR** (after-tax profits as a percent of nominal GDP) 96 Q3 8 6 86 4 2 Profit Margin* Resource Utilization Rate** 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 1 3 5 7 9 11 13 15 17 19 21 82 78 * After-tax profits reported to IRS (excluding Inventory Valuation Adjustment and Capital Consumption Adjustment). ** Average of all industries capacity utilization rate and employment rate, i.e., percentage of labor force that is employed. Source: Bureau of Economic Analysis, Bureau of Labor Statistics, and The Conference Board. 95 85 Figure. CAPACITY UTILIZATION RATE & GDP PROFIT MARGIN Capacity Utilization Rate Q3 12 11 9 75 8 7 6 7 65 Corporate Profits After Tax* (as a percent of nominal GDP) 68 7 72 74 76 78 82 86 96 98 2 4 6 8 12 14 16 18 2 5 4 3 * After-tax profits as reported to IRS excluding Inventory Valuation Adjustment (IVA) and Capital Consumption Adjustment (CCAdj),which restate the historical cost basis used in profits tax accounting for inventory withdrawals and depreciation to the current cost measures used in GDP. Source: US Bureau of Labor, Bureau of Labor Statistics, Board of Governors of the Federal Reserve System, and Bureau of Economic Analysis. Page 5 / November 3, 217 / Resource Utilization www.
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