Tomorrow’s durable goods numbers for May are a more important indicator of the direction of the economy than today’s disappointing figures on new home sales. (New home sales in May dropped by a record 33% from April to an annual rate of just 300,000.)
In April shipments and orders for the capital goods that companies buy to expand production were disappointingly week. Once you subtracted the effect of strong aircraft sales from Boeing, the numbers seemed to show that investment in equipment and software was slowing. That’s not a good sign for an economy where growth has been concentrated in manufacturing. If companies aren’t adding capital goods, it’s a sign that they’re losing confidence in the recovery. No need to buy equipment if the demand isn’t going to be there.
AÂ drop in durable orders would have an important follow-on echo.
Slower equipment orders would in itself lead to slower growth for the economy as a whole, which would, in turn, lead businesses to cut orders for capital goods even further.
Right now the consensus among economists is calling for a 1.3% increase in durable orders—once you’ve excluded the volatile transportation (Boeing again) sector.
The government releases the numbers at 8:30 a.m. ET.
Oh- begging yer pardons, yer Lords- and Ladyships:
I meant “abhorrence”.
Full Disclosure: sometimes my ee key sticks and doubles on me.
rolfer1-
I must respectfully disagree with your abhorreence of the “self-annointed”: Jim provides the serious, carefully researched, and thoughtfully presented investment advice, us common taters provide a lot of the humour content [not to mention history and spilling lessons, concise and meaningful political analysis, and…let us say…a world-view we would otherwise never be exposed to. I think of the bloggers as being much like the old “Morning Chuckle”, with my coffee. I’d miss that.
Jim, congrats on your anniversary and who says you can’t make money in a churning market — $299/yr subscription – great! (I’ll sign up if certain of the self-annointed “expert commentators” aren’t there….)
For those who are new to this blog, my above “gun” and “south” comment was simply to rebut some quite ignorant comments about south and gun by others. No intention to promote anything here.
British Labor Party which is a BIG spender is gone. Australia’s Labor Party which proposed the super mining tax almost gone. (They had to kick out the super tax Rodd out to avoid an election.) Who is the next?
The latest jobless claim dropped, but how many are due to spill cleaning hire? The biggest hire is TOYOTA’s Misissippi plant, nothing in CA, NY or Chicago land. Add to that is Forbes’ recent report on America’s money is moving to Florida and Texas, both states are SOUTH and allow carry GUNS!
I know we have some very SMART, probably paper-cling (instead of gun-cling) northern or coastal people (instead of dumb southern redneck, just borrowing some words of others) still live in a dreamland and thinking they are superior than the heartland or south. Quite mistakes and ignorance.
Jim, Will we be able to see videos from your news letters in the future ? Too many registration -_- !
Jim, congrats on the one year anniversary… you already have my email addy… and kudos to one of the best reads on line…..