Total Capacity Utilization

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Total capacity utilization measures the percentage of total economic output that is being utilized. A high rate of total capacity utilization is an indicator of inflation as an economy nears its maximum level of output. Low capacity utilization makes it difficult to stimulate the economy because incentives for increasing production that the government provides are often unable to reach many producers, this is because of the limited number of producers in the economy in the first place.

Total capacity utilization fell to 77.92% in June, down from 78.10% in May. Utilization is also down .63% from June of 2018.

The recent slight drop in total capacity utilization reflects a slightly slowing US economy, which could be brought about by a slow in business production as many firms look to cut costs now in anticipation of a more significant economic slowdown in the next year or so. Despite this, unemployment is still down significantly and so are retail sales; demand created by consumers will continue to drive the US economy in the near future because of this.

July 16, 2019