Friday, November 25, 2011

Capital Expenditures

The Lehmann Letter (SM)

This week the Census Bureau reported $71.6 in October new orders for nondefense capital goods:

These include all kinds of business purchases of nonmilitary machinery and equipment, from trucks and trains to backhoes and bake ovens,

Nondefense Capital Goods

(Click on chart to enlarge)

(Recessions shaded)

By placing the latest number on the chart you can see that new orders have reached a plateau in the mid-to-low 70s. New orders have not returned to the 80+ level that prevailed before the recession.

You may recall from earlier editions of this letter that this is typical of so many economic indicators: They have recovered from their recession lows, but are no longer advancing toward pre-recession levels. That’s not necessarily an omen of double-dip, but neither is it a signal of strong recovery.

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© 2011 Michael B. Lehmann

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