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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.

Mike Allen, author of AM
3 hours ago - Politics & Policy

Biden adviser Cedric Richmond sees first-term progress on reparations

Illustration: "Axios on HBO"

White House senior adviser Cedric Richmond told "Axios on HBO" that it's "doable" for President Biden to make first-term progress on breaking down barriers for people of color, while Congress studies reparations for slavery.

Why it matters: Biden said on the campaign trail that he supports creation of a commission to study and develop proposals for reparations — direct payments for African-Americans.

Cyber CEO: Next war will hit regular Americans online

Any future real-world conflict between the United States and an adversary like China or Russia will have direct impacts on regular Americans because of the risk of cyber attack, Kevin Mandia, CEO of cybersecurity company FireEye, tells "Axios on HBO."

What they're saying: "The next conflict where the gloves come off in cyber, the American citizen will be dragged into it, whether they want to be or not. Period."