CHART OF THE DAY: Industrial output shows high interest rates aren't hurting the economy yet

• Global central bank interest rates have tripled to its highest level since 2000.
• Yet industrial output has remained high, which is unusual for periods when rates are moving sharply higher.
• "We don't see sufficient evidence that the global economy is headed for severe recession," Ned Davis Research said.

Our Chart of the Day is from Ned Davis Research, which points to one indicator that shows the economy is still holding up well despite a tripling in interest rates.

The research firm highlighted that the GDP-weighted global central bank interest rate has surged to its highest level since 2000 at just above 5%. This can be seen in the bottom half of the chart.

And yet, the economy appears to be unmoved by the aggressively sharp tightening of monetary policy around the world, as measured by global industrial production, which continues to hover near record highs.

This is unusual considering that in the past, such sharp moves higher in global interest rates has coincided with a considerable decline in economic activity.

"When our GDP-weighted global central bank rate has been this high, it's usually presented much greater headwinds to the global economy," NDR said, highlighting the significant drops in economic activity in the early 2000s and during the 2008 Great Recession.

But NDR thinks the economic resilience can continue because interest rates have risen from abnormally low levels, and real interest rates, which account for inflation, are not as high as they have been in the past.

"The global economy has so far avoided a severe global recession. Among other factors, one could partly attribute this to real rates being lower than in past extreme tightening cycles," Ned Davis Research said.

Other factors giving NDR confidence that the economic resilience is here to stay include a strong US job market, excess pandemic savings held by consumers, and recovering economic growth around the world. China reported third-quarter GDP growth of 4.9% this week, and US retail sales data for the month of September shows a consumer that is still spending.

"We don't see sufficient evidence that the global economy is headed for severe recession," NDR said.

While the economy might escape the damage of higher interest rates, asset prices are "not off the hook," the note said. That's because of shrinking central bank balance sheets, which have historically been associated with weaker equity performance.