The Fed's Own Data Show U.S. Manufacturers Don't Share Its Optimism
by Rich Miller
1:58 PM EST February 23, 2015
Tucked away in last week's report on industrial production from the Federal Reserve was an important piece of news: Manufacturers, miners and utility companies don't seem as optimistic as monetary policy makers are that 2015 will be a markedly better year for the economy.
Industrial producers are scaling back their expansion plans for this year even as Fed officials forecast faster economic growth. Since less investment is often interpreted as diminishing confidence for future demand, the two outlooks are a little hard to square.
Industrial companies will raise capacity by 1.8 percent in 2015, the smallest increase since 2011, after boosting it 3.1 percent in 2014, the Fed said in its Feb. 18 release on production.
The central bank's projections are based on an amalgam of information from trade associations and its own forecasts. They are carried out separately from the economic forecasting process undertaken by staff for the central bank's Federal Open Market Committee.
The projections are important nonetheless because they provide a clue to companies' capital spending plans, a key component of gross domestic product. Such outlays by industrial companies accounted for more than a third of business investment in 2013, according to the Census Bureau.
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http://www.bloomberg.com/news/articles/2015-02-23/the-fed-s-own-data-show-u-s-manufacturers-don-t-share-its-optimism