Durable Goods Take II: Original Report Vs. Revisions

I received an Email from a long time “Minyanville” associate who writes under the pen name of “Mr. Practical”.

He emailed an interesting set of charts on durable goods as originally reported by the Census Department vs. revised numbers from the Census Department.

Durable Goods Ex-Transportation New vs. Revised

Core Capital Goods New vs. Revised

The above charts courtesy of ZeroHedge US Government Quietly Cuts Historical Capex Data By Billions Of Dollars

Here’s another pair of charts to consider.

Core Capital Goods Orders vs. Recessions

Core Capital Goods Shipments vs. Recessions

We have not seen a plunge in core capital goods like this except in recessions or starting right before recessions.

Census Bureau Slide

Here’s my comment from yesterday’s post: Durable Goods Bounce Much Greater Than Expected Led by Autos; Core Capital Weakness: “Companies would rather use cheap financing to buy back shares at insane PE ratios than invest in production.”

With that, let’s return to an article I wrote on robots earlier this month.

Reader Asks “What Will Happen When Robots Take Our Jobs”

Flashback May 14, 2016: Reader Asks “What Will Happen When Robots Take Our Jobs” .

Mr. Practical Comments

I return to that article to post some comments from “Mr. Practical”.

He writes …

Markets should allow (have allowed) enough private wealth from production/technology to be (have been) created to allow people to afford an ever higher standard of living. Technology (robots etc) should drive (have driven) prices low enough for that to happen. That is the capitalistic process.

Government long ago interrupted that process. Instead of allowing prices to go down they have insisted they go up (the main reason is this allows profits/standard of living to be spread among the few and not the many) which has created huge imbalances and led to wealth concentrated in the few and the rest quickly heading to government subsistence. 

Instead of spurring core capital investment, companies buy back shares at absurd valuations, consumers are stuck with rising prices (especially in places where government meddled the most like education and healthcare), and those on fixed income have been clobbered.

Technology should reduce prices but the Fed will not allow that. Nor will the “fair trade” advocates as I noted in Suspicion Sets In; Obama Sounds Like Trump; We’re All Bernie Sanders Now!

Fed and government policies are so counterproductive it’s amazing there is any growth, assuming you believe there really is any growth.