One Picture Tells A Thousand Stories

(1) American economy is far from dead.

At Least America Industrial Output Is Breaking Record Highs In One Category

Markets were happy with today's May U.S. industrial production report, which rose by 1.2%, above consensus expectations of just a 0.8% increase. Industrial production has been rebounding quite strongly since early 2009.

But here's a dose of perspective -- U.S. industrial production remains well below its peak level. In addition, different parts of the U.S. economy are performing differently.

The most stark example is America's manufacturing output of equipment. As shown above, business equipment output (in black) remains well below where it was in 2007 and at a similar level to what was once achieved back in 2000. Ie., it hasn't really gone anywhere in a decade.

In the meantime, America's output of defense and space equipment (in red), mostly tools of war, is at record levels. Industrial activity is clearly booming in the wrong place.

(2) That brings us to the next item :- is America getting ready for another war ?