There's an exception to every rule. But when all you see is exceptions, month after month, you've got to start to wonder whether someone changed the rules.
On Thursday, the Census Bureau released its monthly tally of U.S. durable goods orders, and those doggone "exceptions" did us in again:
Everybody else in the market may have been crowing over earnings numbers this week. (Hey, did you hear General Electric
New orders for manufactured durable goods dropped 2.5%. They would have grown, if not for the transport sector. While certain members of the industry -- notably General Dynamics
Obviously, this doesn't jibe well with President Obama's assertion Tuesday that we've "broken the back of the recession." I'm sure the economy bulls would prefer it if you write off this transport weakness as a fluke. Unfortunately, that "fluke" seems to futz with our recovery with surprising frequency lately. Transports upset our national apple cart last month as well. Defense orders were the issue the month before that. And in August, transports again.
Mama don't like
To paraphrase the old saw: "If [transports] ain't happy, ain't nobody happy." Even Warren Buffett himself uses the health of the transport sector (freight car loadings, to be precise) as his favorite economic indicator.
In all, Transport orders have been down four out of the past five months. Durable goods orders in-total have likewise been down four out of five. Far from being a fluke, an anomaly hiding the strength of the economy, I'd argue that the weakness in transport is both a cause of the economy's weakness, and proof that things are not as good as they seem.
At least, that's how I read the Census Bureau's latest facts and figures. Do you see something different? Take the Foolish Rorschach test, and tell us about it below.
Fool contributor Rich Smith does not own shares of any company named above. Rich is not a licensed economist, but he plays one on the Web. Check out his latest stock recommendations on Motley Fool CAPS. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.