{"id":1708,"date":"2020-04-24T12:01:34","date_gmt":"2020-04-24T16:01:34","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1708"},"modified":"2020-04-24T12:01:34","modified_gmt":"2020-04-24T16:01:34","slug":"april-consumer-sentiment-and-march-durable-goods-orders","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1708","title":{"rendered":"April Consumer Sentiment and March Durable Goods Orders"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Sentiment: -17.3 points; Current Conditions:\n-29.4 points; Expectations: -9.6 points\/ Orders: -14.4%; Ex-Transportation:\n-0.2%; Capital Spending: +0.1%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cConsumers are looking a little toward the\nfuture, but how long that will last depends upon the success or failure of the\nreopening process.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  The great unknown right now is what will\nconsumers do as the economy starts reopening. <\/em><\/strong> Clearly, as people get rehired<\/em><\/strong> and their\nincomes rise (if that is the case, which is not true for everyone), spending\nshould improve.  But how much is the\nquestion.  That will depend upon consumer\nconfidence.  The University of Michigan\u2019s\nConsumer Sentiment Index tanked again in April, but the final reading was up a\nlittle from the mid-month reading.<\/em><\/strong> \nThat gain occurred when the first discussions about reopening the economy\nbegan.  As the month ended, though, it\nlooks like the growing confidence faded. \nHouseholds are more hopeful about the future than they are about\ncurrent conditions.  Whether that can be\nsustained will depend upon how well the openings go and whether there will be a\nresurgence of the virus.<\/em><\/strong>  As the\nreport and many others, including myself, have pointed out many times, if we\nhave to reinstitute stay at home requirements, the impacts could be\ndevastating.   <\/p>\n\n\n\n

Durable goods orders tanked in March, led by huge declines in aircraft and vehicle orders. But excluding transportation, demand held in reasonably well.<\/em><\/strong> Boeing had a large number of cancellations and orders fell nearly 300% over the month.\u00a0 The sharp decline in vehicle sales caused a nearly 20% drop in orders in that sector.\u00a0 Computer orders also fell sharply.\u00a0 On the other hand, communications and electrical equipment demand rose.\u00a0 There was a major surprise in the report: The measure of business investment spending, capital good excluding defense and aircraft, rose modestly.\u00a0 Given all the shutdowns, that will likely be reversed when the April numbers are released.<\/em><\/strong> <\/p>\n\n\n\n

MARKETS AND FED POLICY IMPLICATIONS:The high-stakes game of \u201copen the economy\u201d is starting. <\/em><\/strong>\u00a0It\u2019s good to know that we can now go bowling, get our hair cut, work out and get all sweated up with our friends at a gym and then drop in to get a massage and a mani\/pedi (whatever that is) in Georgia is heartening.\u00a0 And, I really need a new tattoo soon, so that adds to my happiness. I am going to hop on a plane and get to Atlanta as soon as possible.\u00a0I make no apologies for my view that opening too soon creates a massively greater risk than opening late.\u00a0 The impact on consumer confidence and therefore spending of having to reinstituting restrictions could be devastating. It could wipe out much of the progress that could come from the consumer and business support programs passed by the government, as well as the credit and lending actions taken by the Fed.How we would get out of that hole is something I don\u2019t even want to think about.\u00a0 <\/em><\/strong>So all we can do is hope that the gamble works out.\u00a0 How strongly demand rises, though, will depend upon how safe people feel.\u00a0 There will likely be an initial jump in demand but it may not be nearly as great as many think.\u00a0 As long as the virus is running wild, a significant segment of the population will either be unwilling to get back into the world or will do so in a limited way.\u00a0 <\/em><\/strong>Since we are still well away from having a national testing system in place, don\u2019t expect demand to surge and stay high.\u00a0 Remember, the generation with the most disposable income is the baby-boomer generation and they are also in the high-risk category.\u00a0 If they get back in the game cautiously, as I suspect will be the case, the V-shape recovery theory falls apart.\u00a0 But even worse, a resurgence in the virus could send that group into hibernation and that would make a sustained recovery almost impossible. <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Sentiment: -17.3 points; Current Conditions: -29.4 points; Expectations: -9.6 points\/ Orders: -14.4%; Ex-Transportation: -0.2%; Capital Spending: +0.1% IN A NUTSHELL:  \u201cConsumers are looking a little toward the future, but how long that will last depends upon the success or failure of the reopening process.\u201d WHAT IT MEANS:  The great unknown right now is … Continue reading April Consumer Sentiment and March 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-1708","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1708","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=1708"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1708\/revisions"}],"predecessor-version":[{"id":1709,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1708\/revisions\/1709"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1708"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1708"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1708"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}