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Tag Archives: Durable Goods

Another Bad Sign for the Economy: Wholesale Inventories Surge Again

On Friday, the yield curve inverted, often a warning sign of an impending recession. Many mainstream pundits say we shouldn’t be concerned about the inversion and that the US economy is still healthy. They say there are other underlying reasons for the inverted yield curve. But there are plenty of other economic data points that are flashing recession warnings. For instance, inventories are piling up in warehouses.Wholesale inventories surged again in January, according to the latest...

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More Slumping Durables In August—–The New Abnormal

Durable goods continue to suggest a weak economy that only seems to remain in that state. Year-over-year, unadjusted estimates for new orders rose slightly for the first time since May, while seasonally adjusted total orders (including the transportation sector) were fractionally lower at $226.9 billion. That amount was 2% less than January 2016 and 4.3% below August 2014. Once again we find that the seriousness of the slump is not defined by its depth but its length, especially since there...

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May Durable Goods Report Adds To The Idea of Depression (Small ‘d’)

There wasn’t anything new or surprising in the advance durable goods report. Shipments (ex transportation) were flat and orders were up 1% year-over-year (NSA). Capital goods (non-defense, ex aircraft) shipments fell 3.4%, the tenth straight month of contraction, while new orders were down again (2.6%) for the sixteenth time out of the past nineteen months. The slump only continues. With last month’s benchmark revisions, however, we have a much better view of the overall slowdown. It...

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Mind The Seasonal Maladjustments And Other Statistical Shennanigans—Investment Risk These Days Includes The Census Bureau

When I started in this business more than twenty years ago, I fully expected to be a profession investor in the purest sense of the term. I envisioned spending my days tearing apart corporate financials, especially balance sheets, and matching them to common sense expectations of new products and imaginative advances. It was the 1990’s, after all, and everything seemed new even if it was all suddenly devoid of healthy skepticism. That was investing as almost everybody understood it. The...

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Ritual Weakness Is More About The Ritual Than The Weakness

The worst part of this stilted or stunted economy is that it isn’t nearly good enough to produce widespread prosperity (with very real questions as to whether it produces any prosperity at all). It has become self-reinforcing, however, to the point of circular logic. We (economists) are now so conditioned by the low, unstable growth that we are supposed to just accept it. Furthermore, because growth remains low it, for the mainstream, must mean that not only is this is as good as it gets but...

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Inside Q1 GDP——-Worse Than It Looks

With no “unusual” snow or “residual seasonality”, the US economy once again grinds to a halt in Q1 only now with no more reasons to dismiss it. In what has become an annual ritual, GDP barely moves in the quarter immediately following the Christmas holiday. This time, however, it wasn’t just consumers holding back in Q1. The U.S. economy inched forward at the weakest pace in two years from January through March, as consumer spending growth slowed, business investment plunged and exports...

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Where It All Went Wrong——The ‘Recovery’ Is Hollow, The Fed’s Growth Narrative Is False

With the housing recovery, it is perhaps because it has been much more visible and earnest that the disparity is more easily appreciated and understood. Prices have surged in some places as much as the housing mania portion of the great bubble of the 2000’s, yet that has taken place despite levels of overall activity at only fractions of that prior period. Thus, it is what looks like recovery with all the characteristics in price and momentum yet suspiciously devoid of true depth that would...

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The Slowdown Is Consumer-Driven

Without the assistance of an extra day as in February, durable and capital goods orders and shipments returned to the usual contraction. As is typical for this part of the slowdown, these are not huge declines but merely the continuation of contraction now stretching into a second year. Durable goods orders (ex transportation) were in March 0.23% less than March 2015, which was already 1.08% below March 2014. The “stacking” of contraction in capital goods has been more extreme, with new...

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The Long Slump In Durables——Why This Cycle Is Different

Orthodox economic theory assigns recession to some exogenous “shock.” Without it, an economy is supposed to grow indefinitely along its trend or potential baseline so long as NAIRU (non-accelerating inflation rate of unemployment) is maintained. As you can imagine, economists and policymakers spend most of their time on that latter part which is one reason, though more so ideology, that they ignore the questionability of the former assumption. In very simple terms, any positive number and a...

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Economic Theory Meets Main Street Reality—–It’s Not All Good

By Lance Roberts at Street Talk Since the end of the financial crisis, there has been an ongoing debate about the economy. However, the debate I am speaking of is not between investors and Wall Street, but rather between economic theory and “Main Street” reality. Over the last few months, in particular, economic and media “experts” have become more vocal about the ongoing detachment between economic theory and actual economic activity. The ongoing hope, as point out by Myles Udland recently,...

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