Once again, disappointing economic news out of China has set investors’ nerves on edge. Although the actual decline of China’s Purchasing Manager Index was not all that large, a significant improvement had been expected. Thus, hopes for a turn in that economy were dashed. Realistically, however, China is not the problem. The real worry is that global slowing—and specifically the decline of industrial production in the United States—will drag us into recession. Broad leading indicators for most global economies show no strong evidence of an impending recession, but the weakening industrial activity has left an anxious undertone. Yet when we take a deeper look at the factors that have weighed on U.S. production, we find that the outlook for industrial activity is probably better than most investors fear.
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