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Capacity utilization in the USA 1967 - 2018

Long-term decrease of the utilization of capacity in the USA is speeding up in the last twenty years

The article „The worldwide industrial production and the outlook“ indicates developments that are to be expected in the course of the worldwide economy. Against this backdrop this article highlights substantial changes in the course of the utilization of capacity of the entire industrial production in the US. A further article compares the courses of industrial production and national debt in the USA.

Made in USA

Update February 13th, 2019 - The following diagram shows the course of the utilization of capacity during the last 50 years.

 

Two substantial changes in the course of the capacity utilization show up.


The utilization of capacity has been dwindling on a long-term basis since the end of the 1960s, i.e. for 50 years.

The utilization of capacity in the USA from 1970 to 2018.
Source: G.17, published by Federal Reserve System of the USA, Dec 17, 2018. Utilization of capacity black line total industry, red line manufactauring. Trend lines by Quest Research.

The drop in the utilization has been accelerating during the last 20 years. In this time the utilization of capacity sank by six percentage points from 84% (1997) to 78% (2018).


However, by six percentage points the utilization of capacity had already decreased in the time before from 90% to 84%. But this drop had happened within 30 years from 1967 to 1997, a period by one third longer!

Why has capacity utilization been declining over all the ups and downs of industrial production for 50 years?

 

The performance of the machines and plants is increasing more strongly and more dynamically than the markets’ absorbing power for output of the ever more powerful systems. Under these circumstances the direct way to higher profitability leads to further cost reductions in form of higher output per time unit. In this context automation technology is playing a key role. However, this tends to lowering in turn capacity’s utilization.

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