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Photo: Costfoto/Barcroft Media via Getty Images

Retail sales were the big story on Wednesday, but the January readings of U.S. industrial production and producer prices also provided important insights into the economy.

The big picture: Industrial production rose by 0.9% month over month, following a downwardly revised 1.3% gain in December, and is rapidly approaching levels seen before the pandemic.

  • However, the growth in production was well below the growth in retail sales, suggesting that either the increase is coming entirely from inventory reductions or exports.
  • The pickup in U.S. imports and Chinese exports in recent months suggests it is the latter, and combined with supply constraints and bottlenecks in Asia could weigh on overall U.S. growth.
  • U.S. capacity utilization has bounced back from its pandemic lows but is still at its lowest rate since February 2017.

The Producer Price Index rose 1.3% last month over December, the biggest gain since December 2009 when the government revamped the series. Producer prices rose 1.7% over January 2020 — strongly beating expectations of a 0.4% month-over-month gain and 0.9% annual gain.

Be smart: Taken together, the data tell a story of demand returning but supply not quite keeping up, meaning prices rise.

Go deeper

Retail sales surge 5.3% in January

Shoppers walk past a giraffe made from Lego blocks at the Easton Town Center Mall in Columbus, Ohio. Photo:grapher: Luke Sharrett/Bloomberg via Getty Images

Retail sales jumped 5.3% last month — blowing past the 1.2% increase anticipated by economists, the Commerce Department said on Wednesday.

Why it matters: It’s the first month-over-month increase in shopping figures since September — with consumers getting a boost from the most recent pandemic relief package.

26 mins ago - Health

Pfizer-BioNTech: Booster doses more effective at blocking Omicron

Prepared doses of the BioNtech-Pfizer Covid-19 coronavirus vaccine in Germany on Dec. 7. Photo: Thomas Kienzle/AFP via Getty Images

Pfizer and BioNTech said Wednesday that two doses of their COVID-19 vaccine were significantly less effective at neutralizing the Omicron variant in early lab tests, but a three-dose regimen was more effective.

Why it matters: Omicron, which has been labeled a variant of concern by the World Health Organization after being identified by scientists in South Africa last month, has forced vaccine makers to reassess the effectiveness of their vaccines against this specific new form of coronavirus.

Mike Allen, author of AM
32 mins ago - Politics & Policy

Biden unveils "Building a Better America" branding

President Biden speaks on infrastructure while visiting a bridge in Woodstock, N.H., last month. Photo: John Tully/Getty Images

President Biden today launched a new website and unveiled bold new branding as part of a nationwide tour to sell the benefits of his infrastructure package.

Why it matters: The White House says passage of the new law shows the ability to "forge bipartisan consensus and prove our democracy can deliver big wins" even in these toxic times.