The Census Bureau reports “New orders for manufactured durable goods in August increased $3.9 billion or 1.7 percent to $232.8 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 6.8 percent July decrease. Excluding transportation, new orders increased 0.2 percent.”
Yep, new orders are up two of the last three months, but they are also up three of the last five, with two wild swings, one in each direction. Let’s investigate more details.
Durable Goods Categories
Hurricane Impact
Fortune Magazine reports Hurricane Irma and Harvey Damaged 1 Million Cars. What Happens Now?
Hurricane Harvey destroyed 300,000 to 500,000 vehicles in Houston alone, according to Cox Automotive estimates. The firm, parent company of Kelly Blue Book and AutoTrader.com, has its headquarters in Atlanta.
Good for Dealers Bad for Drivers
The LA Times reports Hurricane Harvey Ravaged Cars and Trucks — Bad for Drivers, Good for Automakers.
Good News for the Economy?
In one word no. Involuntary destruction of productive assets is never a good thing economically.
Yet, New York Fed president William Dudley says Hurricane Effect to Provide Long Run “Economic Benefit”.
Consistency Underappreciated
Today’s durable goods report is likely to boost GDP estimates a tiny bit, but that will come at the expense of already fading future demand.
GDP estimates have fallen substantially.
We have economically clueless officials setting interest rates and policy.
Mike “Mish” Shedlock
Obviously no one at the The Fed ever heard of the Broken Window Fallacy. At lot of good those university degrees did them (NOT!).
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While it is impossible for destruction of productive assets to improve the economy for real, it is very much possible for such destruction to “improve” the measures The Fed, along with the rest of the charlatan game called macro economics, likes to pretend are representative for the health of the economy. And the latter is what most, laymen as well as so called “mainstream economists,” refer to when they speak of economic well being.
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Some dates for everyone to jot down:
01 OCT: 2017: The QE unwind begins
DEC 2017: The next fed rate hike
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new cars everywhere in Houston these days
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Auto electronics on printed circuit boards cannot be repaired.
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Durable Goods sales up. It would tell the whole story if a chart of household debt were shown. I’m thinking a 1:1 correlation.
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If the destruction takes place overseas and we get orders for replacement that’s a plus for our economy if the destruction takes place in the US that’s a net loss.
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Any destruction is a net loss. Arbitrarily drawn national boundaries have no bearing on the matter whatsoever. Exactly the same (il)logic that gives rise to the above conclusion, can be used to “demonstrate” that the states other than Texas and Florida “benefited” from the hurricanes. And that Dallas and Austin “benefited.” And that the guys in Houston whose stuff didn’t get destroyed, “benefited.” All the way to the reductio ad absurdum conclusion that you personally would “benefit” the most, if everything on the planet outside of your lot, got completely destroyed; such that all that existed anymore, was whatever happened to be in your house and yard.
In reality, every time a penny of positive value gets destroyed anywhere on creation, it reduces the amount of value available to be traded for whatever anyone whose stuff did not get destroyed, has available. Hence reduces real demand for everyone elses stuff. Hence making everyone else marginally poorer.
Things get a bit technical wrt military goods in the hands of others, but the “trick” is to recognize that a pile of dust and shrapnel in the hands of Kim, has greater economic value (as in not a huge negative value) from the perspective of most Americans, than the ingredients of the pile has, if arranged into a nuclear enrichment facility…..
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Well, maybe not 1:1. Insurance companies took a hit too.
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Reblogged this on World4Justice : NOW! Lobby Forum..
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