Is This a Major Setback for the U.S. Economy?

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After having posted two solid months of gains in November and December, industrial production edged down 0.1 percent in January, the Federal Reserve reported on Friday. This drop came alongside a 0.4 percent dip in United States manufacturing output.

Ahead of the report, analysts polled by Bloomberg had expected the index to rise 0.2 percent to follow December’s gain of 0.4 percent. But manufacturing, which represents 75 percent of the total production, fell and brought down the entire index. Comparatively, revised data for November and December showed the biggest two-month gain since 1984.

The Federal Reserve’s monthly index of industrial production, along with the related capacity indexes and capacity utilization rates, cover manufacturing, mining, and electric and gas utilities. Together with construction, the industrial sector accounts for the majority of the variations in national output over the course of the business cycle, and therefore these measurements provide an important reading of the health of the economy…

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