Durable Goods Orders Fall
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Demand for U.S. durable goods unexpectedly fell in August, signaling companies are planning to curb spending on concern gains in sales will not be sustained.
Orders for goods meant to least several years dropped 2.4 percent, the worst performance since January, the Commerce Department said today in Washington. Excluding transportation equipment, orders were little changed.
So much for “green shoots”. Home sales unexpectedly fell yesterday, and now durable good orders fall unexpectedly. Not to say that this is the beginning of a sustained trend-change, but we’re getting close.
Sluggish Economic Recovery
Restrained consumer spending and near-record excess capacity mean companies will probably not boost investment in new plants or equipment in coming months. The report indicates the jump in auto sales from the Obama administration’s $3 billion trade-in program may not give other industries a jolt, raising concern any factory rebound will be uneven.
“Firms are delaying spending where possible,” said David Semmens, an economist at Standard Chartered Bank in New York. “The U.S. has a disappointing recovery ahead. We are not going to see the kind of rebound we are used to.”
I always make it a point to focus on consumer spending, which is directly correlated with bank credit and unemployment. What’s amazing to me is that we are experiencing a clear secular trend change in the behavior of consumers, yet economists are latching on to a status quo of consumer spending that doesn’t exist anymore.
