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Durable Goods data from Commerce Department, revision inset from Bloomberg Econoday, chart by Mish

Please consider another heavily revised Durable Goods Report from the Commerce Department.

Advance Durable Goods

• New Orders: New orders for manufactured durable goods in May, up four consecutive months, increased $0.3 billion or 0.1 percent to $283.1 billion, the U.S. Census Bureau announced today.
• This followed a 0.2 percent April increase originally reported as plus 0.7 percent. Compared to the unrevised number, durable goods fell 0.4 percent. More on revisions below.
• Excluding transportation, new orders decreased 0.1 percent. Excluding defense, new orders decreased 0.2 percent. Transportation equipment, up three of the last four months, drove the increase, $0.5 billion or 0.6 percent to $95.4 billion.

Shipments

• Shipments: Shipments of manufactured durable goods in May, down following three consecutive monthly increases, decreased $1.0 billion or 0.3 percent to $284.7 billion.
• This followed a 1.2 percent April increase.
• Transportation equipment, also down following three consecutive monthly increases, led the decrease, $0.8 billion or 0.8 percent to $92.0 billion.

Last Month’s Chart

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Durable Goods data from Commerce Department, revision inset from Bloomberg Econoday, chart by Mish

Hoot of the Day

Hmm. It seems that last month the Commerce Department revised March from 2.6 percent to 0.8 percent. This resulted in an alleged 0.7 percent rise in April.

But that 0.7 percent for April is now reported as 0.2 percent.

This is a massive 2-month negative revision of 2.3 percentage points. But hey, this is how you get to say new orders have risen four consecutive months.

Bear in mind this is nominal data.

To get real (inflation-adjusted) data we can subtract the CPI.

Durable Goods Real New Orders Percent Change From Year Ago

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Real Orders and Shipments Year-Over-Year Key Points

• Year-Over-Year Real New orders are down six consecutive months (blue highlights)
• Year-Over-Year Real Shipments are down 15 out of the last 17 months (green highlights show positive months) starting January 2023.

Shipments are important because that’s what feeds GDP. And it hard for shipments to do well if new orders are plunging.

If this looks recessionary, it’s because it is recessionary.

And huge trade frictions coupled with Bidenomics adds to costs and inflation. For discussion, please see Is Globalization Dead? Two Views, Brad Setser’s and Mine

Trade Friction Melting Point

Pettis: “Surging US fiscal debt is needed mainly because the alternatives – surging US unemployment or surging household debt – are worse.”

That trio of alternatives led to terrible fiscal policy under every president, inept Fed policy, tariffs by Trump and Biden, nonsense like the Inflation Reduction Act, and calls for more military spending by both parties because hardly anybody remotely understands what’s going on or why.

Meanwhile, expect more revisions, mostly negative.

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