Markets were happy with today's May U.S. industrial production report, which rose by 1.2%, above consensus expectations of just a 0.8% increase. Industrial production has been rebounding quite strongly since early 2009.

But here's a dose of perspective -- U.S. industrial production remains well below its peak level. In addition, different parts of the U.S. economy are performing differently.

The most stark example is America's manufacturing output of equipment. As shown below, business equipment output (in black) remains well below where it was in 2007 and at a similar level to what was once achieved back in 2000. Ie., it hasn't really gone anywhere in a decade.

In the meantime, America's output of defense and space equipment (in red), mostly tools of war, is at record levels. Industrial activity is clearly booming in the wrong place.