Thursday’s durable goods report for August brought more evidence that the US economy is stumbling toward recession, and that the Fed’s massive money printing campaign has been an abysmal failure. To wit, shipments of so-called core CapEx (nondefense capital goods less aircraft) were down 2.5% from prior year, confirming that last summer’s spurt of shipments is rolling-over on pace with the even larger 5.7% drop in orders.
This dramatic southward turn puts the lie to the “escape velocity” meme of Wall Street pitchmen who claim to be “economists”. They had been insisting for months now that there was nothing wrong with the US economy except some cold and snow last winter, and that with the arrival of flip-flops and shorts the growth genie would finally come leaping out of the bottle. That acceleration, in turn, would be accompanied by surging business CapEx because an economy bounding toward full employment will need more investment in machinery and equipment.
The funny thing is that these same Wall Street shills have not changed their tune, even as the data has once again foiled their endless hopium about the purported economic recovery and unseemly cheerleading for higher stock prices. As we have pointed out repeatedly, Wall Street gets away with this tommyrot in part because the mainstream financial press is just plain lazy, and possibly stupid, too.
Not surprisingly, therefore, Dow-Jones’ MarketWatch was johnny-on-the-spots after the August release helping the Keynesian chorus try to turn lemons into lemonade:
Although business investment is weaker compared to 2014, core capital spending has jumped an annualized 8.5% from June through August compared to the same three months of 2014.
“In short, investment in equipment appears to be recovering in the third quarter,” asserted Paul Ashworth, chief U.S. economist of Capital Economics.
What’s unclear is whether the upsurge will persist through the end of the year.
Say again. The chart above shows that there has been no “upsurge” in 2015 whatsoever, either in orders or shipments of capital goods. In fact, shipments during the three month period of June through August were down