April Was Awful – Will May Be Better?

For those of you that felt the pain of April – you are not alone, and you are justified in saying it was the worst of times.

US Industrial Production in April 2020 fell a staggering 13.3% from the March level, the steepest decline on record.
To put it in perspective, the next-steepest decline was in 1920, and Production declined 6.3% then.

This April is following on the heels of a nearly unprecedented drop in March, which amplifies the pain.

We’ve been asked if this is the start of the next Great Depression. Our answer is no. In Brian Beaulieu’s blog, you can read more about how the growing national debt is not at a tipping point – yet. The other key point is that this decline cannot be attributed to a broken economy; a natural disaster is keeping the wheels of the economy from turning.

With the world reacting to two black swan events, we at ITR Economics are also reacting differently than normal. You are used to seeing forecasts from us stay in place for long durations, so you have a steady beacon to guide your expectations. However, as events continue to unfold, we are scrutinizing each forecast and are revising forecasts more frequently than normal to provide you with guidance for the future.

In June, we will receive the US Industrial Production data for May. As stay-in-place orders are being lifted around the country and companies better understand what they are dealing with, we are hearing from numerous clients that, after shutting down in April, they have been able to get production back on line in May, to varying degrees. We are anxiously waiting to see if the May data reflects the green shoots we are hearing about from our customers. Stay tuned.

Jackie Greene
Director of Economics