The "Real" Goods On The March Durable Goods Data

Core Capex per Capita

Here is the real per-capita Core Capex smoothed with its six-month moving average for a better sense of the trend. This metric has essentially gone nowhere over the past six years.

Core Capex per Capita

The Long-Term Trend

As these charts illustrate, when we study durable goods orders in the larger context of population growth and also adjust for inflation, the data becomes a coincident macro-indicator of a major shift in demand within the U.S. economy. It correlates with a decline in real household incomes, as illustrated in our analysis of the most recent Census Bureau household income data:

The secular trend in durable goods orders also helps us understand the long-term trend in GDP illustrated elsewhere. See especially the most recent update on GDP.

As we can see from the various metrics above, revisions notwithstanding, the real per-capita demand for durable goods had increased since the trough at the end of the last recession. But new orders remain far below their respective peaks near the turn of the century. A key driver, or lack thereof, for healthy growth in durable goods orders is growth in household incomes. For a perspective on this point, see our latest update on Median Household Incomes, data through the previous month.

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