Capitalist crises arise inevitably from the system’s own laws, as the drive for profit and competition compels renewed expansion of production while workers’ suppressed wages limit the market’s ability to absorb commodities. This results in overproduction, not of goods beyond human need but of goods that cannot be profitably sold, manifesting as idle capacity, layoffs, investment into unproductive military sectors and the subsequent destruction of productive forces to renew the cycle.

In the U.S. today, civilian industrial utilization remains below its long-term average, inflation persists despite stagnant output, and rising debt at every level substitutes for real productive investment, with resources funneled into speculation, militarism, while basic industries shed jobs. Such conditions reveal a structural crisis, deepening day by day.

Current Industrial Production Rates

In July 2025, U.S. industrial production declined by 0.1% month-over-month, following a revised 0.4% gain in June, leaving overall output just 1.4% above its level a year ago according to the Federal Reserve, G.17 Report. Crucially, capacity utilization, the share of the economy’s potential output actually being used fell to 77.5%, which stands 2.1 percentage points below the long-run average stretching from 1972 to 2024. In manufacturing specifically, utilization slid to 76.8%, reflecting idle plants, unused capital, and reduced labor demand even as sectors like aerospace and defense are expanding.

Durable goods rose 0.3%, led by strong gains in electrical equipment, aerospace, furniture, and industries linked to military expansion and technological infrastructure. However, primary metals, machinery, and notably motor vehicles & parts fell, with the latter down 0.3% in July following a steep -2.6% drop in June. Nondurable goods slipped 0.4%, pulling back in areas such as food, paper, and chemicals. The mining sector dropped 0.4%, and utilities declined 0.2%, signaling contraction in basic materials and energy production.

In contrast, sectors aligned with military and high-technology investment remain robust. Investments in the semiconductor industry have exceeded $500 billion since the 2022 CHIPS Act, according to the Semiconductor Industry Association. Defense and space manufacturing output reached $145.69 billion (2017 dollars, annualized) in June, while Lockheed Martin plans production of over 600 PAC-3 MSE missiles in 2025, nearly double recent years. Thus, capitalism channels resources into unproductive weaponized and technocratic sectors while allowing broad civilian production to atrophy, capital accumulation through militarization and high-tech precision, while the living conditions of the proletarian remain under a tight squeeze by capital.

Layoffs Across the United States & Rising Homelessness

In 2025, U.S. employers have announced more than 800,000 layoffs, up 75% from the same period in 2024, hitting both the private and public sectors. Major corporations driving these cuts include Intel (over 5,000 jobs, mainly in its Foundry division), UPS (20,000 positions), Microsoft (around 15,000 combined across two rounds), Oracle (188 Bay Area roles plus other global cuts), and numerous other tech firms such as Amazon, Meta, Google, HPE, NetApp, and Scale AI, often citing automation, AI integration, and restructuring as causes. The public sector has also seen deep reductions, with the federal civilian workforce down by about 260,000 jobs, including significant cuts at the Department of Defense, Veterans Affairs, IRS, and other agencies.

Despite these mass layoffs, the official unemployment rate in July 2025 stood at 4.2%, with roughly 7.2 million Americans unemployed. Long-term unemployment, however, rose to 1.8 million, or nearly one-quarter of the total jobless population. Job creation has slowed, with nonfarm payrolls adding only 73,000 positions in July and previous months revised downward. The labor force participation rate dipped to 62.2%, and the employment-to-population ratio edged down to 59.6%, reflecting both hidden underemployment and worker withdrawal from the labor market. This contrast between headline stability and underlying weakness suggests a labor market under growing strain, where job losses in key sectors are masked by modest gains elsewhere.

As such, the pauperization of the masses continues to advance. In 2024, the U.S. experienced a record-high surge in homelessness, with approximately 771,480 people counted on a single night, an increase of about 18% from 2023. This translated to roughly 23 individuals per 10,000 people, the highest rate ever recorded. The 18% year-over-year rise was accompanied by even larger jumps among certain demographics. Family homelessness rose nearly 40%, while the number of children under 18 experiencing homelessness increased by 33%, totaling nearly 150,000 youths

This worsening crisis stems largely from a scarcity of affordable housing, rising rents, the rollback of pandemic-era housing assistance, and external shocks such as natural disasters and increased migration. Although some areas, such as veterans’ homelessness, saw modest declines, the overall trajectory remains sharply upward, particularly affecting families and children.

The Persistent Inflation

The latest data from the U.S. Bureau of Labor Statistics confirms the contradictions of the capitalist mode of production are sharpening with inflation rates beginning to rise once again. In July 2025, the Producer Price Index (PPI) surged by 0.9% in a single month, the sharpest rise since June 2022, pushing the annual rate to 3.3%. The core PPI, excluding food and energy, advanced 3.7% over the same period. The Consumer Price Index (CPI) climbed 0.2% month-over-month and 2.7% year-over-year, with shelter costs up 3.7% and medical care costs up 3.5%. The Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred measure, stands at 2.9%, well above its own stated 2% “price stability” target.

Yet this inflationary persistence is coupled with slowing production and rising unemployment. These figures point to a classic bourgeois dilemma. The ruling class must either tolerate rising unemployment to discipline inflation, which could disrupt markets by putting downward pressure on consumption and lead to more political and social instability, or cut interest rates to temporarily stimulate demand, risking the re-acceleration of prices.

The specter haunting the U.S. economy – what bourgeois economics call stagflation – is an enduring element of the overproduction crisis. The capitalist press treats this as a “policy puzzle.” We insist it is the predictable result of the law of value operating under conditions of mature imperialism. Meanwhile, news headlines continue to talk of the drama between Trump and the Federal Reserve Chair he appointed during his first term. Trump’ calling Powell “grossly incompetent”, a “moron”, and threatened lawsuits in a political maneuver to force rate cuts that might deliver a short-term boost to financial markets and bolster his electoral position. The Federal Reserve, for its part, defends higher rates in the name of “credibility” and “price stability,” meaning the defense of the value of money capital at the expense of the working class. Both positions serve the same end of the preservation of capitalist relations of production and the subordination of human need to the dictates of profit.

The productive apparatus is underutilized, debt mounts at every level, and the very tools of bourgeois economic management, monetarily tightening or loosening, can only redistribute the pain between classes and sectors, never resolving the underlying contradiction. This is not a temporary “misalignment” of policy. It is a crisis of the capitalist mode of production itself, which can only be overcome by abolishing the wage system, expropriating the capitalist class, and reorganizing production under the dictatorship of the proletariat to serve social need.