Durable goods regain two-thirds of August tumble in September

posted at 10:41 am on October 25, 2012 by Ed Morrissey

Last month, the durable goods report looked disastrous for Barack Obama’s re-election effort, coming in with a 13.1% decrease in a single month, one of the worst reports in the last several years.  Today, the Obama administration got better news from the Census Bureau, but not entirely great, as the September report on durable goods showed that the US gained about two-thirds of the drop back:

New orders for manufactured durable goods in September increased $19.6 billion or 9.9 percent to $218.2 billion, the U.S. Census Bureau announced today.  This increase, up four of the last five months, followed a 13.1 percent August decrease.  Excluding transportation, new orders increased 2.0 percent.  Excluding defense, new orders increased 9.1 percent.  Transportation equipment, up five of the last six months, had the largest increase, $16.8 billion or 31.7 percent to $69.6 billion.

On top of this, the news from the Department of Labor was, well, rather dull.  Weekly jobless claims held at about the four-week average, suggesting that the mechanical issues with reporting the last two weeks have disappeared and that nothing much has changed in the labor market:

In the week ending October 20, the advance figure for seasonally adjusted initial claims was 369,000, a decrease of 23,000 from the previous week’s revised figure of 392,000. The 4-week moving average was 368,000, an increase of 1,500 from the previous week’s revised average of 366,500.

The advance seasonally adjusted insured unemployment rate was 2.5 percent for the week ending October 13, unchanged from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending October 13 was 3,254,000, a decrease of 2,000 from the preceding week’s revised level of 3,256,000. The 4-week moving average was 3,269,750, a decrease of 6,750 from the preceding week’s revised average of 3,276,500.

Both reports show a status-quo economy that hasn’t really gained or lost all that much since the summer — and in the weekly jobless claims data, hasn’t moved significantly in any direction since the spring of 2011.  These are indications of continuing stagnation at a very low level of growth.

Boosting that impression, as CNBC reports fairly deep into its article on both economic indicators, is the news that business investment isn’t picking up at all:

The Commerce Department said on Thursday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, was unchanged last month at $60.3 billion. That was short of economists’ expectations for a 0.7 percent gain.

Many economists believe companies are holding back investments due to fears the U.S. Congress could fail to avert sharp tax hikes and spending cuts in 2013, which threaten to send the U.S. economy back into recession.

It’s more than just the fiscal cliff, though, that’s holding back investors, although that’s a big, big part of it.  The Washington Post wrote yesterday about the year-long evaporation of capital investment, well before the fiscal cliff became acute.  In fact, we have seen a 15% drop in capital investment in 2012, accelerating into the third quarter:

The recession brought venture capital investments to their lowest point in a decade as investors hit the breaks on new deals, using their money instead to keep existing businesses afloat.

Although the past two years have seen the venture industry gradually regain its footing, figures still hover well below pre-recession levels. And if the latest reports are any indication, a complete recovery may be a distant goal.

U.S. firms collected $6.9 billion in 820 venture capital deals during the third quarter of the year, a 32 percent drop in dollar value and 9 percent decline in number of deals compared with the same period last year, according to a Dow Jones VentureSource report released last week.

The year-to-date numbers are less drastic. Dow Jones VentureSource tallied $22.8 billion raised by U.S. companies in 2,525 deals thus far into 2012, a 15 percent decline in dollars and 3 percent slide in deals compared with the first nine months of 2011.

I’d bet this trend started about the time that Barack Obama declared class warfare on capital investors in September 2011.  The slow growth in the US economy shows investors less willing to take risks here since then.

Friday, the Commerce Department will release its advance Q3 assessment of economic growth.  I’d guess that it will hit around 1.7% – 2.0% with this data, with some potential downside.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

S U R E !

KOOLAID2 on October 25, 2012 at 10:42 AM

So, Obama ordered some Volts?

faraway on October 25, 2012 at 10:42 AM

But….but….but.. Colin Powell said things are looking good!!

Bitter Clinger on October 25, 2012 at 10:45 AM

On top of this, the news from the Department of Labor was, well, rather dull. Weekly jobless claims held at about the four-week average, suggesting that the mechanical issues with reporting the last two weeks have disappeared and that nothing much has changed in the labor market:

While true, Obama got his “Jobless Claims Drop” headline because DOL put the missing jobless claims from California on 10/13 instead of 10/6.

Steve Eggleston on October 25, 2012 at 10:46 AM

Transportation equipment, up five of the last six months, had the largest increase, $16.8 billion or 31.7 percent to $69.6 billion.

This is always the most volatile part of the durable goods market anyway. It yo-yos so much that it ends up having a pretty serious impact on the final numbers – it did in last month’s numbers, too, contributing a huge negative effect.

Red Cloud on October 25, 2012 at 10:51 AM

I expect a slew of “good” news just prior to election day. Unemployment at 7.5% perhaps? Growth over 2%? Hopefully Romney will be able to weather the propaganda.

SAZMD on October 25, 2012 at 10:53 AM

I bet if the MSM ask, they’ll find the increase is in hope and anticipation of a Romney win. Wouldn’t surprise me if they already know it, too.

So don’t expect them to ask.

Gooooooooooooo, ‘Bama!

Liam on October 25, 2012 at 10:55 AM

They are just orders. Chances are the government said they plan to buy more airplanes, but in reality they will not. Psych!

astonerii on October 25, 2012 at 10:55 AM

Help me find somebody who really believes that a sustainable recovery is just over the horizon.

Tell that to my family, friends, co-workers and neighbors who are still unemployed, postponed retirement, come out of retirement to work part-time, graduated college and can’t find a job, working several jobs to make ends meet, lost their savings, lost their homes or can’t afford to send their kids to college.

It’s likely to elicit a response you can’t print.

Marcus Traianus on October 25, 2012 at 10:56 AM

Does Bernanke’s 40 billion a month printing spree have anything to do with this???? Hummmm?

Rovin on October 25, 2012 at 10:59 AM

I expect a slew of “good” news just prior to election day. Unemployment at 7.5% perhaps? Growth over 2%? Hopefully Romney will be able to weather the propaganda.

SAZMD on October 25, 2012 at 10:53 AM

Agreed, this is very likely. The Obama regime will pull out all the stops to get some good story, any good story, into the MSM.

BTW did you notice the “layers of fact checkers” in the WaPo with their line that “investors hit the breaks” on new deals?

jwolf on October 25, 2012 at 11:00 AM

Does Bernanke’s 40 billion a month printing spree have anything to do with this???? Hummmm?

Rovin on October 25, 2012 at 10:59 AM

I think it has been increased.

astonerii on October 25, 2012 at 11:00 AM

Durable goods regain two-thirds of August tumble in September

IOW, it’s still down by a third. Great!

Dusty on October 25, 2012 at 11:03 AM

Oh, so this is what Obama’s “manufacturing boom” looks like!

natasha333 on October 25, 2012 at 11:05 AM

AMD is going to layoff 15% of its workforce.

Red Creek on October 25, 2012 at 11:06 AM

The Commerce Department said on Thursday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, was unchanged last month at $60.3 billion. That was short of economists’ expectations for a 0.7 percent gain.

Unexpected!

We really need some new economists.

1) There is still uncertainty over the cost of employees due to yet unwritten Obamacare regulations.

2) Uncertainty over the course of the next few years because of the election.

No one is going to do anything until after the election. And if Dear Liar somehow wins, businesses are just going to hunker down.

rbj on October 25, 2012 at 11:06 AM

Buried in the report is this scary little nugget:

“Most of the durable goods are soylent factory equipment and meat shredders.”

Bishop on October 25, 2012 at 11:09 AM

“Regains 2/3rds” SO THE ECONOMY GREW BY 66% IN SEPTEMBER? /sarc

oldroy on October 25, 2012 at 11:10 AM

Seriously to the board and Ed.

The durable goods report with less than 2 weeks to go doesn’t mean ANYTHING to this election.

I don’t know if you noticed but not even Benghazi is penetrating the news cycle.

Does anyone think they go up to a swing voter and point to the durable goods report and get a reaction that gets this fence sitter to move?

This would get the “Only Finance Nerds Care ” award in Wonkville.

Conan on October 25, 2012 at 11:10 AM

It is likely that conditions are a lot worse than are being reported by these agencies. Personally, I’m way past the point where I believe any figures being disseminated by the Obama Government. (They’ll be corrected/adjusted after the election.)

One thing about the Obama years is, Democrats everywhere can finally wallow in their nostalgia for the Great Depression. Happy Days Are Here Again!

Scriptor on October 25, 2012 at 11:15 AM

This would get the “Only Finance Nerds Care ” award in Wonkville.

Conan on October 25, 2012 at 11:10 AM

Which is why the rat-eared wonder went potty mouth in Rolling Stone Magazine. Trying to connect with the basement dwellers. And further cheapening the office of President.

Looking forward to the Romneys and some real class in the White House.

Happy Nomad on October 25, 2012 at 11:16 AM

I expect a slew of “good” news just prior to election day. Unemployment at 7.5% perhaps? Growth over 2%? Hopefully Romney will be able to weather the propaganda.

[SAZMD on October 25, 2012 at 10:53 AM]

Breaking:

2 October 2012

Bureau of Labor Statistics released it weekly report today showing jobless claims unexpectedly dropped by 366,000 reaching an historic low of zero, slashing the four week average by a quarter and dropping the unemployment rate to really really low number but wouldn’t offer a figure.

An anonymous Labor Department spokesman cautioned that the weekly applications can be volatile, particularly the week before an election and another source said the one person responsible for inputting the data did not show up for work yesterday which accounts for the number being zero. The source did not name employee but said if he doesn’t show up after the election BLS will have someone else enter the data.

The White House hailed this news as proof his plan is working ….

Dusty on October 25, 2012 at 11:25 AM

Does Bernanke’s 40 billion a month printing spree have anything to do with this???? Hummmm?

Rovin on October 25, 2012 at 10:59 AM

QEforever? Brilliant isn’t it? Previous QEs were big news, now with QEforever they can just brush it off as ‘an old program’.

slickwillie2001 on October 25, 2012 at 11:47 AM

Gas prices “unexpectedly” tumble in Ohio past couple of weeks

http://www.ohiogasprices.com/Retail_Price_Chart.aspx

Can’t imagine why. /s

Clink on October 25, 2012 at 11:31 AM

Yep, I was surprised to see it was $3.06 a gallon for regular this morning.

flstc on October 25, 2012 at 11:49 AM

Yep, I was surprised to see it was $3.06 a gallon for regular this morning.

flstc on October 25, 2012 at 11:49 AM

That’s weird. It’s still $3.80 to $3.90 here in Western NY.

Dusty on October 25, 2012 at 12:00 PM

But if you elect Mittens, your asking for the same like it was 6 years ago! You know with 4-5% UI and employers could not FIND enough bodies to fill openings!

/libitard

watertown on October 25, 2012 at 12:25 PM

Dead Cats.

FlaMurph on October 25, 2012 at 12:26 PM