For equipment and software, those rates are 14 percent and 17 percent, respectively.
With the capital stock depreciating so rapidly and investment declining, the rate of investment "is barely adequate to prevent an outright decline in capacity," Willmore says. Add to that the pick-up in industrial output, which is up an annualized 5.5 percent in the first four months of the year, and all the pieces, not to mention both graphs, start to fit together.
If industrial production maintains its rate of growth for the entire year, which DiClemente's chart suggests is likely, and capacity growth remains sluggish, the capacity utilization rate will rise 4 percentage points, "bringing it back to a level close to historical averages by early next year," Willmore says.
If excess capacity is a problem, there's more than one way to skin that cat.
RSS