No new significant economic data today, but yesterday we did get a look at manufacturers’ orders for durable goods.

This is one of those noisy indicators that sometimes is leading (2000), sometimes is not (2007), and sometimes gives false positives (2016 and 2019), but has historically been considered a leading indicator for the economy:

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Yesterday’s report for July showed a -2.8% monthly decline, which still kept the value higher than at any point before May. Since much of the volatility has to do with airplane orders (Boeing), the core capital goods measure, which excludes aircraft and defense, is typically more important. This rose 1.1% monthly, to the highest level since late 2022:

(Click on image to enlarge)

The general trend this year remains positive, which is a good - if surprising - thing; particularly as spending on goods, especially durable and consumer goods, is an important short leading indicator I am watching more closely since I have gone on “Recession Watch.”

Because so many durable goods are imported, real consumer spending on such goods has risen much faster than domestic production of such goods, so the best way to compare the two is YoY, which is shown in the graph below:

(Click on image to enlarge)

There has been some marked deceleration in real consumer spending on durable goods in the past few months, after the tariff front-running of earlier this year.

Real consumer spending will be updated on Friday. Will it resume its prior uptrend, or continue below the levels of earlier this year?

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