Aircraft orders are skewing durable goods numbers.
The Census Department Advance Report on Durable Goods shows a steep plunge, but it aircraft related.
New Orders
- New orders for manufactured durable goods in June, down two of the last three months, decreased $32.1 billion or 9.3 percent to $311.8 billion. This followed a 16.5 percent May increase.
- Excluding transportation, new orders increased 0.2 percent.
- Excluding defense, new orders decreased 9.4 percent.
- Transportation equipment, also down two of the last three months, drove the decrease, $32.6 billion or 22.4 percent to $113.0 billion.
Shipments
- Shipments of manufactured durable goods in June, up seven consecutive months, increased $1.4 billion or 0.5 percent to $302.5 billion. This followed a 0.2 percent May increase.
- Transportation equipment, up six of the last seven months, led the increase, $0.8 billion or 0.8 percent to $98.9 billion.
Durable Goods New Orders and Shipments Detail
It’s real, inflation adjusted numbers that drive GDP so let’s dig in a bit closer.
Durable Goods new orders an Shipments Real Dollars
Durable Goods Real New Orders Percent Change From Year Ago
Durable Goods orders are up 8.0 percent from a year ago but that is skewed by aircraft orders that take a very long time to fill.
Excluding transportation, real orders are down 0.4 percent from a year ago. Real shipments are up a tiny 0.3 percent.
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As with existing-home sales, new home sales are stuck in the mud.
Lots of things seem stuck in the mud.
Banks are enabled to issue unlimited credit – which people like you think is money – because there are no reserve requirements. Thus, the Fed, and therefore the banks that own and control the Fed, are printing “money” and buying bonds and stocks unfettered by reserve requirements which are zero, like spencer said. Of course, smoke and mirror machinations are employed to hide this fact: it wasn’t JPM but a hedgefund that borrowed from JPM; it wasn’t the Fed but a Cayman offshore account that borrowed from a bank that borrowed from the Fed, etc.
Alan Greenspan himself said that we have no way of knowing how much money exists out there. The official public and private debt numbers keep going up by trillions and here you are claiming that money supply actually went down in velocity at least?
As per above, actual potential money supply is INFINITE thus UNLIMITED. Percentage concepts are meaningless. Banks can create any unlimited amount of money instantly.
If a bunch of thieves get access to unlimited funds; they can very well use said funds to artificially inflate the stock market and use stock sales profits as a form of money laundering to generate and cover up illegitimate profits – profits which people will be fooled into accepting as being legitimate because, you know, stocks went up.
Bankers actually can issue each other/themselves unlimited credit (aka “money”). But then people might question the legitimacy of such blatant fraud: why can the bankers write themselves checks but we can’t? Hence the usefulness of the stock market as a money laundering device.
This makes little sense. We have M2 and Total Credit Market Debt Owed.
What’s ridiculous is this “If a bunch of thieves get access to unlimited funds; they can very well use said funds to artificially inflate the stock market and use stock sales profits as a form of money laundering to generate and cover up illegitimate profits – profits which people will be fooled into accepting as being legitimate because, you know, stocks went up.”
No one is going to get access to unlimited funds and use them to drive up the stock market.
Banks have no ability to issue each other unlimited credit.
I don’t know where you are getting this stiff from but it’s bullshit.
Banks do have ability to create money by loans, but they only do so if they believe they can make a profit in it. That requires the money being paid back.
Mish,
The profits are illusory. Because the “money” is illusory. The goal of the ruling classes (who own and control the Fed) is not to attain illusory paper gains but to obtain control. Over everything.
I didn’t think you were this…[fill in the blank]
Off topic, but interesting.
UK signs comprehensive trade deal with India. Sir Keir said the agreement was “the biggest and most economically significant” trade deal Britain had made since Brexit. It took 3 years to negotiate. And I suspect that Trump’s neverending trade threats helped push them to complete it.
• Eliminates tariffs on 99% of Indian exports to the UK
• Benefits sectors like textiles, leather, auto parts, engineering goods, and education
• UK gains smoother access to Indian markets for medical devices, cosmetics, and cars
• Expected to double bilateral trade to $120 billion by 2030
A win-win for both sides.
I expect a lot more of these announcements of comprehensive trade agreements between countries, rather than quick but insignificant little “deals”.
Mish and All, FYI, in earlier times Dur Goods Ex Aircraft was PIMCO and what’s his name’s top econ tea leaf.
It’s a category error to index durable goods against overall CPI. Doing so gives a misleading sense of decline in real demand.
Inflation is very different in goods vs. services. CPI Inflation for goods has been lower than services for quite some time. Some of that is probably bogus (“hedonic adjustments”) but some of it is real – technology, labor outsourcing and regulatory arbitrage did make goods production cheaper.
Durable goods demand would be better tracked in terms of unit volumes. Numbers of cars, aircraft, refrigerators, dishwashers etc.
The FED has a big problem. It can’t control the money stock using interest rates. Means-of-payment money has been surging. Why do you think stocks have been rising?
Dr. Daniel L. Thornton, May 12, 2022:
“However, on March 26, 2020, the Board of Governors reduced the reserve requirement on checkable deposits to zero. This action ended the Fed’s ability to control M1.”
All we really need now is the dustbowl to come back.
You think stock prices have risen because regular people choose to hold more of their own money in personal checking accounts or money market deposit accounts (aka – M1)?
I hope you have a professional money advisor to help with your family’s finances
And “surging”?
M1 money supply is currently 4.2% higher than it was a year ago, but still 9.5% lower than it was three years ago.
What has happened to stock prices during this three-year period of declining and then increasing M1 money supply? Fairly linear increase. So no correlation, that’s what (and certainly no causation)
M1 was redefined. M1 is mud pie. Nothing’s changed in over 100 years. The distributed lag effects of money flows, the volume and velocity of money, are mathematical constants.
Retail MMMFs aren’t money. Draining the O/N RRP facility added new money to the economy. The FED’s definition is double counting.
And there’s been a seismic change in the composition of the money stock. The ratio of DDs to TDs has doubled. That’s what’s prevented a recession.
I don’t need professional help. I’m an inveterate FED watcher.
On the day the market bottomed, I repeated myself 3 times:
That’s B.S.
Bottom’s in.
Mar 23, 2020. 10:34 AM
Link
Margin Call: The Story Of A Historic Week – The Heisenberg
Bottom for stocks, not the economy. It will decouple.
Mar 23, 2020. 10:33 AM
Link
We Likely Saw The Bottom – Michael A. Gayed, CFA
The bottom’s in.
Mar 23, 2020. 10:28 AM
Money is the measure of liquidity, the yardstick by which all other assets are measured.
If the “store of purchasing power” attribute of money, when applied to a given asset, is to have significant meaning, it ought to be defined in terms which are applicable to the whole economy. That is, no asset really has a “monetary store of purchasing power” quality unless there can be a net conversion of that asset into money, ceteris paribus. In other words it must be possible to effect this conversion without necessitating that any present money holder reduce/liquidate his holdings/assets. Any other interpretation becomes mired in a futile discussion of relative degrees of confidence and liquidity. But much more than monetary liquidity for the individual holder is necessary if an asset can be said to have the “store of purchasing power” quality; it must be simultaneously monetarily liquid for society as a whole.
The supply of money is as irrelevant to stock market prices as it was to the price of tulips in Holland during the tulip mania 400 years ago.
The only thing that matters is the price at which the marginal buyer and seller agree to transact.
Just precrash hoarding.
From that data bullet point, one can conclude the good headline number is government driven; not good as the private sector has to be healthy to support the government.
In 2025 SPX was down 1300 and up 1550, between Feb and June. SPX looks tired.
5K/6K, or below !, before moving up to 7K/8K min.
Leave the predictions to the astrologists.
I’ll have you know that Michael’s crack pipe is a VERY reliable source
The trick is smoking it with the posterior instead of the anterior. Colon crack reveals secrets unknowable to others.
Hasn’t taken taco long to make America great again.
You obviously have a net worth of less than 100 million.
So Tony appears to have a Net Worth, a bit higher than $1M, if he is of Average Income. JS…
US navies launched SM3, SM6 and SM2 against the Hoothies and Iran. Israel was
covered by 2 Thaad batteries. Guam 1, Korea 1, Arabia Saud 1 and at least 4 in the US. Our missile are depleted. We are exposed to Putin and Xi. It will take years to replenish. Massie is wrong.
The latest gdpnow estimate for the 25th is 2.4 percent. It’s more like stagflation, business stagnation accompanied by inflation.
The economy is being run in reverse. Housing affordability declining as incomes can’t grow as fast as the price of housing. Something obviously isn’t kosher. Money is not tight.
Sorry, Spencer, but you should check your definition/understanding of economic concepts.
Stagflation is ‘stagnant’ growth accompanied with inflation. The GDPNow number is in real (after inflation) terms; so 2.4% real growth is far from stagnant; and likely due to the very low unemployment rate of 4.1%. And inflation is a relatively low 2.7%.
These two latter numbers added (for simplicity) for the so-called Misery Index is 6.8%. That is nowhere close to the pain felt in the 70s (when the “stagflation” concept really took hold) with a Misery Index of 20-22%.
1st qtr N-gDp 3.2 percent. Personal consumption expenditure 2.8 percent.
We’ll soon know, but so far GDPNow is sailing in the dark in the Tariff Sea. The Philadelphia Fed is predicting 1.5%.
Economics is an exact science.
Just another example of tariff induced purchasing with borrowed money.