The Slow U.S. Contraction Continues

As I reported last month, February’s Durable Goods report was extremely weak. Consequently, expectations were high for a March rebound but what we got this week in the March Durable Goods report was a bounce of just 0.8% month-over-month (M/M), missing expectations of a 1.9% surge. Dead cats bounce better than that.

Core Durables Goods Orders fell for the 14th consecutive month year-over-year (Y/Y), a losing streak never seen outside of a broad US recession. Capital Goods Orders, a critical component of the report that approximates business capital spending, came in flat compared to expectations of +0.6% gain, Capital Goods Shipments rose +0.3% vs +0.9% expected and both categories were revised lower for February. Not a pretty picture.

The Durable Goods Orders headline number turned back into the red Y/Y:

Screen Shot 2016-05-31 at 2.17.15 PM

Core Durable Goods Orders in March fell for the 14th consecutive monthly drop Y/Y, despite a surge in defence aircraft orders. This has never happened outside of a recession. It looks like this:

Screen Shot 2016-05-31 at 2.17.45 PM

Finally, the all-important core capital expenditures series (capex), otherwise known as nondefense capital goods ex aircraft, was unchanged for the month of March compared to February, printing a terrible 2.4% decline Y/Y. This also represents 14 consecutive months of core capex declines, something else that has never happened outside of a recession:

Screen Shot 2016-05-31 at 2.18.19 PM

Yesterday, the FOMC statement continued to reinforce the message that the US economy remains strong. I’d like to have some of what they are smoking. Maybe then I wouldn’t be so depressed by the Durable Goods report.

I continue to call this a recession, dear reader.