{"id":1537,"date":"2019-05-24T09:41:58","date_gmt":"2019-05-24T13:41:58","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1537"},"modified":"2019-05-24T09:41:58","modified_gmt":"2019-05-24T13:41:58","slug":"april-durable-goods-orders","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1537","title":{"rendered":"April Durable Goods Orders"},"content":{"rendered":"\n

KEY DATA:<\/strong> Orders: -2.1%; Ex-Nondefense\nAircraft: -1.0%; Capital Spending: -0.9% <\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe growing signs that manufacturing is\nsoftening cannot be overlooked and it looks like second quarter growth could be\nweaker than expected.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Summer may be coming, but it\u2019s beginning to\nlook like winter in the manufacturing sector. <\/em><\/strong> Durable goods order collapsed in April, though\nthat was expected.  Boeing is seeing\nbasically no new orders and that led to a huge 25% drop in aircraft demand.<\/em><\/strong>  But if you take out the nondefense aircraft\nsegment, orders were still off<\/em><\/strong> one percent, so we are not looking at a\ngrowing demand for big-ticket items.  Still,\nthis report was not uniformly weak. \nThere were increases in orders for computers, fabricated metals and\nelectrical equipment and appliances. \nMore than offsetting those gains were declines in communications\nequipment, vehicles and primary metals.  As\nfor the proxy for business investment – nondefense capital goods orders\nexcluding aircraft – orders also declined sharply.<\/em><\/strong>  This segment has been slowing for quite some\ntime now and it is becoming clear that whatever boom the tax cuts may have created,\nif they did much at all, is largely gone. \nAnd finally, backlogs declined and over the year, order books are\nfilling much more slowly.  That does not\nbode well for future production.<\/em><\/strong><\/p>\n\n\n\n

MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong>  A\nlong weekend could not have come at a better time, as long as investors don\u2019t\nlook at their phones.  <\/em><\/strong>I am sure\nthere will be a whole slew of \u201cfascinating\u201d tweets coming out of the White\nHouse.  There will be plenty of time next\nweek to panic and then breath deeply and then panic again.  But there are some patterns emerging.  The first is that the manufacturing sector is\nflattening out.  The second is that the\nprogress that was supposed to have been made on a trade agreement with China\nwas mostly puff with little pastry.  The\nthird is that it appears that households don\u2019t really care that much, as long\nas jobs are plentiful. <\/em><\/strong>  It\u2019s that last point that needs to be watched,\nas often, changes in confidence, up or down, are not followed by modifications\nin spending habits.<\/em><\/strong>  Remember,\nfirst quarter consumption was tepid, at best. \nIt was initially assumed that the extreme weakness in durable goods\nspending would dissipate in the spring, but the pathetic April vehicle sales\npace raises questions about whether that will happen.  The May vehicle numbers are ten days out, so\nwe can still harbor some hopes for consumers, but I am not so sure.  As for the other weak link in the first\nquarter GDP report, business investment, it looks like it continues to go\nnowhere.<\/em><\/strong>  The economic\nfundamentals are not strong despite solid job growth and until that disconnect\nis ended, we have to assume growth will moderate.  Investors, though, continue to be jerked\naround by the president\u2019s tweets and until that changes, all I can do is point\nout what the economic data mean, not what the markets may do.  As for the Fed, the members\u2019 comments show there\nis little agreement on what to do.  So, the\nbest thing is to punt, which is what they are planning to do.Have\na safe and enjoyable Memorial Day weekend!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Orders: -2.1%; Ex-Nondefense Aircraft: -1.0%; Capital Spending: -0.9% IN A NUTSHELL:  \u201cThe growing signs that manufacturing is softening cannot be overlooked and it looks like second quarter growth could be weaker than expected.\u201d WHAT IT MEANS:  Summer may be coming, but it\u2019s beginning to look like winter in the manufacturing sector.  Durable goods … Continue reading April Durable Goods Orders<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1537","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1537","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1537"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1537\/revisions"}],"predecessor-version":[{"id":1538,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1537\/revisions\/1538"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1537"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1537"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1537"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}