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Page added on July 14, 2014
What Is Power Consumption Telling Us About The US Economy?
We track US power consumption on a weekly basis as reported by Barron’s, as we believe this information provides insightful – albeit sometimes “noisy” and seasonally unadjusted – clues about the performance of the economy over time.
The expectation is that a more robust economic environment requires more power, although factors like colder winters and warmer summers relative to the norm can greatly skew the analysis. With that in mind, let’s have a look at the weekly historical performance of this indicator going back to 1995 (in MM kWhs):
Many peaks and bottoms can be observed as power demand changes seasonally over the year. We have used polynomial smoothing to extract a trend line (in black).
Some quick observations:
- US power consumption peaked in 2006 (red line), approximately in line with the peak in the US housing market, and the trend line has flatlined since.
- By definition a peak in consumption means that any new capacity additions, for instance to accommodate incremental renewable energy production, will need to be made at the expense of existing production capacity, which in turn will affect plant efficiencies and so forth. That being said, there is a considerable amount of coal-fired capacity, possibly even nuclear, that will be coming off-line in the coming years mainly due to environmental regulations, so it will be interesting to see how all of this will play out in the US power markets.
- The last intra-cycle power consumption peak was recorded in 2011, broadly in line with the recent global peak in commodity prices. While most commodity price analysis commentary focuses on China as the “marginal” buyer, it seems the US still plays an important role not only as a supplier but also as a consumer.
Consumption peaks normally come in late July/early August, so it is still a bit early to gauge how 2014 is shaping up. However, in the grand scheme of things and despite the limitations of this indicator, historical kilowatt consumption suggests that the US economy at best continues to muddle along, despite an unprecedented amount of policy stimulus – some of which may even be curtailed before the end of the year.
14 Comments on "What Is Power Consumption Telling Us About The US Economy?"
M1 on Mon, 14th Jul 2014 8:01 am
Have not the utility industry given insight into homeowner’s increased efficiency efforts?
For example, when I moved into my house, I replaced 15 100watt bulbs with 25watt energy efficient bulbs.
– New Hybrid Hot Water heaters generate the same heat, but cut electric usage.
– Then these’s the expansion of solar.
– More home insulation means lower natural gas and oil purchases.
– New air conditioning systems are 2x more efficient as 10 year old modes.
I don’t know any neighbor who is ignoring the recent sudden price spikes in energy, and doing nothing.
rollin on Mon, 14th Jul 2014 8:19 am
M1 is right and extend that to business and industry who have been conserving for over a decade now.
With increases in efficiency and conservation, growth can occur during an energy plateau.
Use of single output in a multivariate situation can lead to erroneous conclusions.
bobinget on Mon, 14th Jul 2014 8:38 am
Besides PV solar we need to factor hot water and hot (for heat) air solar.
Every month expect the unexpected. Equaling old temperature records, (nationwide) commonplace. IOW’s hotter summers, colder winters in current high population regions of America’s NE. Recurring ‘polar vortex’ will become household words. This, as result of warming arctic air pushing cold south.
While utilities can to some extent duel meter track net consumption. However, full time hot water heaters are
huge power hogs. Replacing these with solar or
heat pump heaters have drastically reduced consumption. On the other end, WiFi, DVR’s, TV and other always on devices take their toll 24/7.
Chris Hill on Mon, 14th Jul 2014 10:08 am
Unfortunately, for all the energy-saving technology that comes along, there seems to be some new thing that wastes just as much. Take this study for example: http://www.moneytalksnews.com/2011/06/20/study-cable-boxes-power-refrigerators/
I’m sure some new houses are more efficient than older ones, but only the most decrepit get trashed, otherwise people are still living in them. I have a neighbor who is still nursing along a 35 year old air conditioning system. My parents haven’t replaced theirs since it was installed back in ’86. We put one in our house back in ’96, and I’d love to replace it with something newer and more efficient. When you spend less than $150 a year on air conditioning, though, it just doesn’t make sense to replace it before it fails.
We don’t hardly have an y incondescent bulbs left, but I suspect we’re the minority.
Kanute on Mon, 14th Jul 2014 2:29 pm
Consider the increase in population over that time frame also. The increase in population would dwarf any energy conservation efforts over that same span of time.
Baggins on Mon, 14th Jul 2014 5:31 pm
Public debt consumption is growing exponentially, though.
Norm on Mon, 14th Jul 2014 10:25 pm
Hi there Chris Hill, always fun to compare notes. I have a 1976 house with an original whole-house AC unit that still works great. But those designers did not care about energy efficiency. The system draws about 30 Amps @240V = 7200 Watts… a colossal amount of energy.
I still use it cause its days used each year is limited. Replacing it uses resources too.
Rule of thumb… you get the lowest electric bills, from the costliest HVAC equipment.
You get the highest electric bills, from the cheapest HVAC equipment (or free equipment, cause it been there so long).
I still use 100% tungsten bulbs cause cannot stand the color spectrum of the twisty bulbs or LED bulbs. Stashed away boxes of light bulbs, like a right winger stashes away ammo.
The most gigantic hugest residential win, is ‘water furnace’ (geothermal heat exchange of a heat pump).
Those are obtaining COP (coefficient of performance up to about 6. Get 6000 Watts heat for 1000 Watts energy. So that is close to heating for free.
Sadly, that is the most expensive type of installation. If somebody wanna cut me a check i will upgrade, otherwise, oh well.
Makati1 on Mon, 14th Jul 2014 11:08 pm
per capita electric consumption in 2013:
US: 1,402 Watts
Japan: 774 W
EU: 688 W
China: 313 W
India: 90 W
Philippines: 60 W.
World average: 313 W.
The only countries that use more than the US are the northern cold countries, with the exception of Kuwait. Norway, Canada, Finland, Sweden & Iceland use more electric than the US, per capita.
Who has the farthest to fall?
Davy on Tue, 15th Jul 2014 4:35 am
There you go again Makster using your per capita numbers. Why not throw out some aggregate numbers. Another thing Makster the US is the best positioned for lifestyle and attitude changes. We have much more room per your numbers to adjust. We have much more cushion. OOh, that sucks doesn’t it Mak. I know you want it to be painful sorry it doesn’t always work that way.
Makati1 on Tue, 15th Jul 2014 8:49 am
Davy, per capita is how the world works. The more per capita, the more demand for resources.
Attitude changes? Hahahahaha…
Lifestyle changes? To 3rd world levels, yes, but at what price? 1/3 of the population dying of suicide, drug addiction, obesity, etc.? A dictatorship? A police state?
Yes, you have some room to adjust, down. Way down. At what point in that 1,402W number does your infrastructure crash? 800W? I bet it is closer 1,000W. Your economy? If it gets to 1,200W without crashing, you will be lucky. The US is on a razor edge and the winds of change are blowing from every direction these days. Americans don’t know how to live with a lot less, but they are going to learn.
Davy on Tue, 15th Jul 2014 11:29 am
Mak, the world is not a per capita world except for rabid tird world lovers like you. Should we support Asia’s baby factories? No, Mak, we have a good life here we worked hard for despite your rabid negative rehtoric. Oh, Mak, descent goes by levels and you are already at the bottom so your next level is famine. We may be heading to tird world level but at east we will have something to eat! I will be eating steak and you will be eating rice and coconut rations
Arthur on Tue, 15th Jul 2014 11:42 am
“Norway, Canada, Finland, Sweden & Iceland use more electric than the US, per capita. Who has the farthest to fall?”
These nordic countries won’t fall at all, because all these countries (not sure about Finland) have almost 100% electricity from renewables (hydro). The lucky bastards. The lesser Gods will have to install solar panels on every roof and 1-2 wind turbines next to every village. And they will.
Northwest Resident on Tue, 15th Jul 2014 11:57 am
Davy said: …”for rabid tird world lovers like you.”
I think you misspelled “tird”. Shouldn’t that be a “u” instead of an “i”?
🙂
Come on Davy. Cut Makati1 some slack. He’s 70 years old for Christ sake. That officially qualifies as an “old coot” in my book, and you gotta give old coots the space they need to rant and rave, even if it does get noisy and a little bit crazy (or a lot) from time to time. Clearly, no fact will sway Makati1 from what he wants to believe, so what’s the use?
Davy on Tue, 15th Jul 2014 1:14 pm
Yea, NR, dementia has set in with ole Mak. To be fair I am over 50 and finding my faculties lacking. I will cut him some slack when he tones down his negativity one notch. That is all I am asking…one notch. That means having a little bit of balance in his negativity to include his beloved Asia. As for the Tird world that is a word from DC, another rabid Anti American commenter on this board who was also around 70. DC has not commented in months thank God now it is just the Noob, the Clue, and Makster. These cats are enough to keep up with.