On the economics side of the information flow absorbed by markets over the past few days, the housing market data came in relatively moderate, with prices indicating some confidence in the future of the demand side. Among this weeks’ big figures are the Census Bureau’s durable goods orders. Of the entire information released, two are generally considered by market observers as most influential in giving an indication of where the economy is heading: the new durable goods order figure and the new durable goods order less the volatile transportation orders (right or wrong, the reporting is akin to the way the inflation figures are reported excluding the volatile food and energy components).
The seasonally adjusted durable goods figures came in below expectations, with the new durable down 5.7 percent over the prior month and the new durable goods orders excluding transportation coming in down 1.4 percent over the prior month.
The -5.7 percent figure for new orders puts at about where the figure stood in September 2012. The $216.276 billion in new orders is up by about $75 billion from its March 2009 low of $141.359 billion and only about $27 billion (13 percent) below the all-time high of $243.721 in December 2007.
In looking at the recent movements in the durable goods orders, the figure has been relatively flat since about the third quarter of 2011. The narrow range in movement over the prior two years is consistent with a moderate recovery continuing to take place, although, as any close observer would point out when looking at the longer term trend, the risk in movement in growing greater to the downside rather than the upside. Should the market enter bear territory within the next couple of quarters, such an outcome would be consistent with a local peak in the new durable goods figures.
On the durable goods figures less transportation, today’s figures also show an economy reaching an end of the accelerating portion of the economy, with the $153.850 billion seasonally adjusted figure about $2.6 billion short of its all-time high of $167.575 billion in June 2008.
Overall, the durable goods figures released today paint a picture of an economy slowing down, consistent with the often-mentioned May growth problem since 2010. Whether the figures turn out to be just another May growth scare or something more indicative of a prolonged downward movement from peak is another one of those trillion dollar questions.