Chart of the Week: Earnings vs. Capacity Utilization

Thursday, March 18, 2004 | 11:52 AM

Since 1970, changes in the Capacity Utilization Rate have correlated well with Corporate Earnings. In the past, capacity utilization bottomed (or peaked) 6 to 15 months before earnings. Not so during the present recovery: Profits soared while capacity utilization remains at a relatively low 76.6%.

Earnings vs. Capacity Utilization
Source: ChartoftheDay

Two possible explanations: US companies are outsourcing to low cost countries, driving profits at the expense of US manufacturers. Some finger “quality of earnings” as the culprit, as they were during a similar divergence in 1999-2000.

Random Items:
Gunning for the U.S. in Technology
From IQ to No Clue: Cockiness & Trading
The Future of Money: How Banks Should Prepare
A tax loophole for common folks
Where Are The Jobs?
The Six Greatest Value Investors on How to Do It

Quote of the Day:
“I am glad that I paid so little attention to good advice; had I abided by it I might have been saved from my most valuable mistakes.”
-Gene Fowler (1890-1960)

Thursday, March 18, 2004 | 11:52 AM | Permalink | Comments (1) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



TrackBack URL for this entry:

Listed below are links to weblogs that reference Chart of the Week: Earnings vs. Capacity Utilization:


The key is there is no pressure from labor costs and there is fine productivity. So, you get fine earnings. We need a better return to labor.

Posted by: anne | Mar 18, 2004 5:41:24 PM

The comments to this entry are closed.

Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      


Complete Archives List



Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:

Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo



Odds & Ends

Site by Moxie Design Studios™