July 19, 2023

Industrial production declined 0.5 percent in June for a second consecutive month but advanced 0.7 percent at an annual rate for the second quarter as a whole. The industrial production index has posted a positive gain during each of the first two quarters of the year. Yet, at 102.2 percent of its 2017 average, total industrial production in June was 0.4 percent below its year-earlier level. Rather than speculate as to the likely market outcomes and the likely policy responses, assuming that the futures market contains information as to the likely policy response, we can estimate the likelihood and strength of the continued market recovery by evaluating the historical relationship between the futures market and the Industrial Production Index. The estimated probability of the Industrial Production Index outperforming the trailing four quarters forecast a steady slowdown of the industrial Production growth rate bottoming during the first quarter of 2024. These estimates are consistent with a deceleration of the industrial production growth rate. We look for the index to decline 2% during the next 12 months. In an election year, such an outcome is not an endorsement of Bidenomics industrial

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