Capacity Utilization

1
Capacity Utilization

• When a recession hits, the amount of unused
  capacity in American industry rises rapidly
  capacity utilization typically falls from
  somewhere around 85 to something between 70 and
  80.
• The runup to a recession is often accompanied by
  slowly-falling capacity utilization--as was the
  case in 1979, 1989, and early 1990.
• The boom of the 1990s did not see capacity
  utilization reach its standard high boom-time
  levels, in large part because industrial capacity
  grew so fast because of the extremely high levels
  of investment.
• But capacity utilization began to decline in
  recent years well in advance of the NBER's March
  2001 dating of the beginning of the recession.
• Capacity utilitization has so far
  declined--measured from its peak--by more than in
  the recession of 1990-91, more than in the
  recession of 1980, and by four-fifths as much as
  in the recession of 1981-82.