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Scary Durable Goods Numbers

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Thursday, 27 September 2012 08:37

The Commerce Department reported that durable goods orders fell by 13.2 percent in August, not surprisingly the Wall Street Journal chose to highlight this drop. While the number is dramatic, nearly all of the drop was in the highly volatile transportation component. Excluding transportation, orders fell by a considerably more modest 1.6 percent.

Within transportation, civilian aircraft stood out with a decline in orders of 101.8 percent. Yes, the number was over 100 percent, as apparently there were more orders canceled in August than added.

Clearly there are some issues of timing here, but at the moment not very much cause for concern. If we want to know how businesses are thinking about the future, we might look at orders for non-defense capital goods, excluding aircraft, which rose by 1.1 percent in August, albeit after two sharp monthly declines. Anyhow, the overall picture in this report is negative but certainly not the disaster that the WSJ article implies. Given that weekly unemployment claims hit a new low for the recovery, a wait for evidence view might be appropriate.

 

Correction: Bill Heffner's comment below is right. The 359,000 claims reported in the most recent week is higher than two week in July, in which the number of claimsreported were 352,000 and 357,000. It is worth noting that claims are almost always revised upward, but usually by a small amount.

Comments (2)Add Comment
"unemployment claims hit a new low for the recovery"
written by Bill Heffner, September 27, 2012 9:22
You might want to check your data. Claima were lower at points in April and May of this year, and were lower throughout most of July and August.
the economy, short term statistics mean nothing
written by mel in oregon, September 27, 2012 12:06
like many progressive websites btp sometimes seems like a site designed to refute some of the worst wingnut editorials from the wa post & ny times. are we closet obama fans? the truth is the economy is in the dumpster & probably will stay there for decades. upturns in the stock market, huge financial gains by the extremely wealthy & corporate tv putting a happy face on their commercials doesn't mean the average american is doing well. all age groups are doing poorly. 20% of children live in poverty. young adults owe over a $trillion on student debt. people in their 40s & 50s have lost a lot of home equity, pensions, a lot have lost their homes. older americans are fearing cuts in ss & medicare, which for many is all they have to live on. all age groups suffer to some extent from unemployment/under employment. it doesn't look like happy days are here again. by the way, the wallstreet journal, while having useful information about investing, has perhaps the most moronic editorials on the planet.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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