Metalworking Forecasting Tools

Engines, Turbines, & Power

Since Americans are better at spending than saving, it makes sense that the real personal income excluding government transfers (think social security, welfare, unemployment benefits, etc.) is a leading indicator of consumer spending, or real personal consumption expenditures. On average, changes in earnings have led changes in consumer spending by six months.

Consumer spending makes up approximately 70% of U.S. GDP. So, when consumer spending picks up or slows down it causes changes in the amount of activity in the economy. When there is more activity in the economy more energy is needed and, consequently, more power generation equipment is required. So, changes in consumer spending drive changes in industrial production of engines, turbines, and power transmission equipment. On average, changes in consumer spending lead changes in industrial production by six months.

Industrial production of durable goods leads machine tool unit sales. For the energy/power transmission industry, this seems to be the case as well.