February 28, 2023
Durable goods orders slipped by 4.5% in January after having surged by 5.1% in December after. However, both he December and January data reflected very large changes in non-defense aircraft orders. This category is very volatile on a month-to-month basis. In the past year durable goods orders have risen 3.0%.
Frequently much of the change in durables is in the transportation sector — airplanes, cars, and trucks. In December transportation orders rose 15.8% and then they declined 13.3% in January. As a result non-transportation orders rose 0.7% in January after having declined 0.4% in December. In the past year non-transportation orders have risen 1.6%. The manufacturing sector has held in there well, but may be beginning to fade.
Given the results of the orders component of the Purchasing Managers Index, durable goods orders growth should decline in the months ahead.
GDP rose 3.2% in the third quarter and 2.7% in the fourth quarter. We expect GDP growth to climb at a 2.0% pace in the first quarter of this year . It still seems to have considerable upward momentum. We expect GDP growth of about 1.5% in 2023.
It fascinates me that in the middle of one of the most gummed up Congress in decades which does not seem to get much of anything done one way or the other, business continues to surge forward beyond expectations. Maybe we are better off with a government that does less instead of more. All we do have to be concerned about is how much more of the wealth of our country gets held in the hands of the “1%” while much of the “99%”, especially those in the lower segments of that large group live in a less than middle class environment. Maybe you have answers to that dilemma.
Dividing new orders by PPI for capital goods and the durables build in orders has been flat. I think this leaves upside for the year ahead. But only a guess on that.
I don’t typically look at the thing you mentioned, but it makes sense to me.