Ignore The Headline SAAR——Durable And Capital Goods Still Contracting

At some point, these continuous divergences between seasonally-adjusted extrapolations and unadjusted year-over-year comparisons will cease to provide so much apparent relief. Time after time, the smallest jump in the monthly variation is taken as cause for completely discarding all prior economic worries even though the more measured and consistent unadjusted growth rates continue to press downward; especially since time and again it is the adjusted “gains” that prove fleeting.

Orders for long-lasting U.S. goods rose in July, and a key measure of investment posted the biggest gain in 13 months, a sign that companies continue to spend despite a tougher business climate.


Durable-goods orders rose a seasonally adjusted 2% last month after a 4.1% gain in June, the Commerce Department said Wednesday. That was much stronger than Wall Street expected.

Where mainstream commentary took that as the only message from the full report, that was actually the only way in which durable and capital goods look anywhere near positive. Even the same article poured on the cold water just a little thereafter:

Still, business investment remains relatively soft, down 3.8% from a year earlier. A stronger dollar has made U.S. exports costlier and harder to sell, a problem exacerbated by a weak global economy. American energy producers have also sharply scaled back spending on drilling rigs and other large equipment amid a plunge in oil prices.

Even in the seasonally-adjusted series, durable goods orders are still down in the enlarging hole, equivalent to the level from December 2011 near the outset of the 2012 slowdown. The contradiction is stark, even from the same written piece; “continue to spend despite” followed just a few paragraphs later by “remains relatively soft.” Good thing stocks have become so unimportant else investors might be forced to square that circle.

Durable goods shipments were down more than 2%

Originally appeared at: http://davidstockmanscontracorner.com/ignore-the-headline-saar-durable-and-capital-goods-still-contracting/