To every rule there is an exception. But month after month, when all you see is exceptions, you've got to start to wonder: Is this a new rule? This morning, the Census Bureau released its monthly tally of U.S. durable goods orders. Here's the rundown:
Now, bulls will tell you to focus on the column at right. They'll argue that if you toss out the precipitous decline in orders for transportation equipment -- i.e., train cars from Freightcar America and American Railcar, planes from Boeing and Textron, and automobiles from Ford and Navistar -- things were actually looking pretty "up" in November.
A similar slump in transport orders sent total durable goods orders spinning in August. Business bounced back in September, but as soon as October rolled around, we were right below breakeven again -- this time with defense orders to blame. Now here we are in December, scanning the data from November, and once again we've got a major market segment "artificially" depressing what's supposedly a booming economy.
Beating a dead economy, er, horse
I'll repeat: When "one-time items" begin to crop up a bit too frequently, it's time for investors to go on high alert. According to the Census Bureau, November marked the third down month out of the last four for declining new orders of manufactured durable goods. Actual shipments of goods -- likewise.
In contrast, unfilled orders (which some would call "backlog," but I interpret as orders that buyers may now be regretting having placed) have risen in 10 of the last 11 months. Inventories (aka goods manufactured, for which no buyers have shown up yet) have grown for 11 straight months.
And so I ask you -- does any of this sound like an economy hungry for new goods? To me, it more resembles an economy that's being force-fed (pun intended) stimulus ... and perhaps getting ready to regurgitate.
Apologies for the unpleasant mental picture, but that's how I see the Census Bureau's latest facts and figures. Do you see something different? Take the Foolish Rorschach test, and tell us about it below.
