Another Look At The Ugly 'Real' Durable Goods Orders

Earlier today I posted a commentary on the September Advance Report on August Durable Goods Orders. This Census Bureau series dates from 1992 and is not adjusted for either population growth or inflation.

Here is a chart of the same data shown with two adjustments, the red line shows the goods orders divided by the Census Bureau’s monthly population data, giving us durable goods orders per capita. The blue line goes a step further and adjusts for inflation based on the Consumer Price Index, chained in current dollars. This gives us “real” durable goods orders per capita.

Durable Goods Order Seasonally Adjusted Graph

Photo: Dshort.com

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Here is the same chart, this time ex Transportation.

Durable Goods Order Excluding Transportation Graph

Photo: Dshort.com

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Now we’ll exclude defence orders.

Durable Goods Order Excluding defence Graph

Photo: Dshort.com

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And finally we’ll exclude both Transportation and defence for a better look at core durable goods consumption.

Durable Goods Order Excluding Transportation and defence Graph

Photo: Dshort.com

Click to enlarge
 

As these charts illustrate, when we study durable goods orders in the larger context of population growth and also adjust for inflation, the data becomes a coincident macro-indicator of a major shift in consumption demand within the U.S. economy. It correlates with a decline in real household incomes, as illustrated in my analysis of the most recent Census Bureau household income data:

  • U.S. Household Incomes: A 43-Year Perspective
  • U.S. Household Incomes by Age Bracket: A Disappointing 21st Century So Far

The secular trend in durable goods orders also helps us understand the trend of declining GDP that I’ve illustrated elsewhere. See especially the most recent update on GDP.

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