Buzz and Banter
First the question. If the one strong component of durable goods is non-defense aircraft, how can we reconcile the fact that Boeing, the world's largest supplier, has been commenting so negatively?
Now the comment. We have found that "durable goods orders" has no correlation to future economic activity. We have studied this pretty hard. During the 1990's, the change in durable goods was all over the place: there was no trend whatsoever and therefore, no predictive value. What does have a very high predictive value is a component that is not reported, "unfilled manufacturing orders". It is basically the backlog. If unfilled orders declines, that means manufacturers are producing more relative to new orders. We have found this is to be a volatile, but highly predictive number for future economic activity.
The trend of this number was down significantly through the recession; it has stabilized, but not recovered. This number was down .3% today.
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