The Lehmann
Letter (SM)
This morning
the Census Bureau reported that capital-goods orders were down in March:
This letter has
always focused on a portion of that report: New orders for nondefense capital
goods, a measure of business (not household) investment in new equipment.
The chart
shows that these orders have popped up strongly since the recession. This
provides more evidence of our bifurcated recovery: Everything but housing seems
to be doing well.
March's $73
billion was down sharply from February's $81.6 billion. There is always noise
in the data, and this statistic is particularly volatile because of its
inclusion of new aircraft orders. So the real story remains: Business capital
expenditures have recovered sharply from the recession.
Nondefense
Capital Goods
(Click on
chart to enlarge)
(Recessions
shaded)
But we should
pay attention to the chart. Business capital expenditures are supposed to
exceed their previous peaks by a great deal. If this series is to do as well as
it did in the 1980s and 1990s, it has to move up to the $100 billion range.
That's a tall order.
(To be fully
informed visit http://www.beyourowneconomist.com/)
© 2012
Michael B. Lehmann
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