A Fundamental Measure of Deviation From the Normal Economy
The Economic Recovery Tracker, or “TMXd”, is a derivative of the Thomas Manufacturing Index (TMX) that measures industrial activity in the United States and Canada. TMXd is a measure of deviation from the normal pattern of industrial B2B sourcing. In an evolving economy, there is a healthy minimum level of deviation. However, this deviation increases dramatically in times of crises, like the current pandemic.
How to Interpret the Index
Deviations from the norm typically happen in times of crises or in times of rapid innovation. The intensity of deviation is higher in times of crises as crises affect the core of industrial production. Innovation on the other hand typically affects specific sectors of industrial production without depressing the core.
As the economy recovers from a crisis, the index shows a steady decline. Reaching the pre-crisis level means that either the economy has gone back to normal or has stabilized in a long term new normal.
Events Significantly Impacting Industrial Activity in 2019 & 2020
In 2019 and into 2020, industrial activity has been largely impacted by trade conflicts with China and, more recently, by uncertainty stemming from the Coronavirus outbreak. These two events markedly disrupted global supply chains, slowing overall production while producing spikes in demand for specific product categories such as steel, prefabricated building materials, surgical masks, and shadow kitchen equipment.
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