The Federal Reserve’s total capacity utilization index measures how much of total available industrial capacity is being used to produce finished products. The index is constructed with data from 71 industries in manufacturing, 16 in mining and 2 in gas utilities. It is designed to operationalize the concept of “sustainable maximum output” which is the most that a unit could produce given its current resources.

Total capacity utilization tends to decline steeply during recessions along with consumer demand and business investment. In this sense it is more of a lagging than a leading indicator of recession.