Plus: Trade Deficit Widens, Administration Claims Stimulus Plan Succeeded and New Food Deputy Appointed at FDA.

Industrial Production Grew in December
The output of the nation’s factories, mines and utilities rose a seasonally adjusted 0.6 percent in December, the sixth consecutive monthly increase, resulting from a 5.9 percent gain in electric and gas utilities due to colder-than-usual weather, the United States Federal Reserve reported Friday.

The output of mines rose 0.2 percent in December, while manufacturing production dropped a modest 0.1 percent last month after posting strong 0.9 percent growth in November. Durable goods production increased 0.1 percent in December, while production of non-durable goods edged down 0.1 percent during the same period.

For the fourth quarter as a whole, manufacturing output increased at an annual rate of 5.7 percent.

Meanwhile, capacity utilization for manufacturing was 68.6 percent in December, 11 percentage points below the average rate for the period from 1972 to 2008. Capacity utilization for total industry edged up to 72 percent, a rate 8.9 percentage points below the average for the 1972-2008 period.

Earlier in the week, the Federal Reserve’s “beige book” showed that the economy’s modest recovery broadened during the last months of 2009 with the help of improvements in the manufacturing sector and an uptick in home sales. The central bank’s latest survey of regional conditions, published on Wednesday, found that conditions in 10 of its 12 districts have improved lately, the exceptions being the Philadelphia and Richmond, Va. districts, which reported “mixed conditions.”

The Fed’s cautious tone continues to suggest that a recovery will be slow and hesitant, and reinforces the notion of a weak labor market that will remain a drag on the economic rebound.

Trade Gap Widened in November
The U.S. trade deficit widened by 9.7 percent in November, climbing to $36.4 billion from $33.2 billion in October, according to the U.S. Department of Commerce on Tuesday.

The November goods deficit increased to $48.4 billion, a gain of $3.2 billion from October, while the services surplus remained relatively unchanged at $12 billion. Total export value rose to $94.6 billion, up by $1.2 billion from the previous month, and import value rose to $143 billion, an increase of $4.4 billion from October.

According to the Commerce Department, the October-to-November gain in exports was driven by growth in food and beverages ($1.3 billion); automotive goods ($0.7 billion); and capital goods ($0.4 billion). Monthly import gains reflected growth in industrial supplies and materials ($2.1 billion); consumer goods ($1.4 billion); and capital goods ($1.2 billion).

“The rising deficit reflected a global rebound in trade spurred by recovering world economic growth. But with the U.S. unemployment rate at 10 percent, it could rekindle American workers’ anger over jobs lost overseas, intensifying trade tensions,” the Wall Street Journal reports (subscription required).

Although the U.S. trade gap with China decreased by $2.5 billion and the gap with Canada by $0.7 billion, the deficit widened with several other major trading partners. The trade gap with the European Union, for example, grew by $1.5 billion in November.

According to the Associated Press, economists predict that as the economic recovery gains momentum in 2010, the trade deficit is likely to continue climbing, “[h]owever, they also contend that the fortunes of American manufacturers will be lifted by a continued rise in demand for U.S. exports as America’s major overseas markets mount a recovery as well.”

Administration Claims Stimulus Plan Succeeded
A new progress report claims that the Obama administration’s $787 billion stimulus plan not only significantly helped the state of the economy by slowing down the financial decline, but also that the employment market is in better condition than it would have been had the stimulus not been introduced.

The second quarterly report on the impact of the American Recovery and Reinvestment Act (ARRA), released Wednesday by the Council of Economic Advisers, estimates that ARRA funds were responsible for between 3 and 4 percentage points of U.S. GDP growth in Q3 2009, as well 1.5 to 3 points of growth in Q4 2009.

The report also says that government stimulus funds directly saved or created 640,000 jobs as of the third quarter of 2009, while the overall employment market has between 1.5 million and 2 million more jobs than it would otherwise have had without the ARRA in place.

“Employment loss in the fourth quarter of 2009 was one-tenth the level it was in the first quarter of the year, and early indicators of labor market improvement, such as the hiring of temporary workers, are showing encouraging signs,” the report explains. “Of course, with the unemployment rate still at 10 percent, the American economy is far from healthy. But there is little question that the economy is on the road to recovery.”

First Official to Oversee all FDA Food Safety Programs Appointed
Michael R. Taylor, a veteran food expert, last week was appointed as the Food and Drug Administration’s (FDA) deputy commissioner for foods, “a new position that elevates food in an agency long criticized for placing greater emphasis on drugs and medical devices,” according to the Washington Post.

In a new interview with the New York Times, Taylor said “his biggest task was readying the FDA to handle the new powers that Congress will soon give it.”

The Post reports that Congress is “moving ahead with legislation to grant vast new authority to the FDA to ensure food safety” and that “Taylor will be responsible for implementing new laws aimed at preventing outbreaks instead of merely reacting after they occur.” The legislation is expected to grant the agency the power to require manufacturers to establish contamination prevention plans, increase food inspections and recall suspect foods.

Taylor has a long career in foods, having worked at the FDA, the Department of Agriculture, the Monsanto Company and in George Washington University’s School of Public Health and Health Services. Since July, he has served as a senior adviser to Commissioner Margaret Hamburg of the FDA.