I ran into my friend David recently, while doing a little Christmas shopping. David is a very successful appliance salesman and owns his own store. I asked him how things were at the shop. He said things were “slower” than last year. I joked that it’s “damn hard to get a washer or dryer down the chimney.” He joked back that they “weren’t so easy to wrap either.”
That conversation seemed all the more telling when shortly thereafter The Commerce Department released information that orders for long-lasting manufactured goods fell 3.1% instead of rising 0.8% for November. In fact, every single category of durable goods suffered from weak demand. I presume that includes washers and dryers also…
Durable goods orders, according to Wall Street economists, reflect business spending plans. Slowing or
lessening indicates slower or less business investment in the quarter quoted. Not a good thing when, all around us, supposed experts are indicating that the economy is growing again. Perhaps expectations of 4% growth or more for the final quarter of 2003 and first quarter of 2004 are a little too ambitious.
This measuring of durable goods orders is not always a certain predictor. Historically, it is a very volatile indicator. Sometimes it is a leading indicator and at other times a lagging one. But the disappointing numbers for November were very broad-based, leading most to interpret this as a negative showing…no matter how you wish to discount it.
The stalwart consumer, the savior of our recent downturn is also spending less than he was supposed to. Only a minor increase in outlays of 0.4% for November, when almost a full percent was expected. Non-farm payrolls rising only by 57,000 also disappointed in November, well short of the 200,000 needed to bring the nasty
unemployment trend into line.
Another thing that comes to mind is how could the “economic fortune-tellers” be so far off the mark? Bad data? Wishful thinking? I am beginning to assume that they are perhaps seeing in their crystal balls what they want to see as opposed to what they should see.
Hmm. Perhaps to much “mist” in economist.