Economic Front: A Brief Reprieve

A small ray of sunshine on the economic front greets us today in the update for durable goods orders. Alas, it’s not the sign of a turning point. Not even close.

New order for durable goods rose 0.8% last month vs. August, the Census Bureau reports. But September’s bump doesn’t change the fact that new orders are down 4.7% from July’s tally and 3.6% below the year-earlier level. Last month notwithstanding, the trend is still down.

If we strip out defense-related items, new orders fell 0.6% last month. No matter, since the market will be looking for positive signs and the top-line number for durable goods orders will satisfy the demand for something sweet. But the economic challenges have barely begun and investors should refrain from reading too much into any one number this early in the cycle.

The real pressure will come in consumer related numbers. It will take months for the full brunt of the financial hurricane of September and October to fully work into the consumer readings. A grim glimpse of things arrived in yesterday’s update on consumer sentiment from the Conference Board, which advises that Joe Sixpack’s as pessimistic as he’s ever been since this index was first calculated in 1967. “Consumers are extremely pessimistic,” observes Lynn Franco, director of the Conference Board’s Consumer Research Center via AP. “This news does not bode well for retailers who are already bracing for what is shaping up to be a very challenging holiday season.”

It’s a virtual certainty that consumer-related economic reports will be discouraging in the months ahead, to say the least. The only questions: How much pain and how long will it last? In any case, brace yourself. The monsters are coming, and it won’t end on Halloween.

About James Picerno 894 Articles

James Picerno is a financial journalist who has been writing about finance and investment theory for more than twenty years. He writes for trade magazines read by financial professionals and financial advisers.

Over the years, he’s written for the Wall Street Journal, Barron’s, Bloomberg, Dow Jones, Reuters.

Visit: The Capital Spectator

1 Comment on Economic Front: A Brief Reprieve

Leave a Reply

Your email address will not be published.


*