Wednesday, June 24, 2009

Durable goods gets the party started...

I remain convinced that the reporters at Bloomberg act like the T-shirt companies serving the NBA before the finals. They print up two sets of shirts - one showing the Magic as the champs and one showing the Lakers - while the reporters have two articles ready one if data exceeds expectations and one if it falls below expectations.


Here was today's latest and greatest: US Durable Good Unexpectedly Jumped in May.


"The 1.8 percent gain in bookings for items meant to last several years matched the previous month’s increase, the Commerce Department said today in Washington. Economists projected orders would drop 0.9 percent, according to the median of 75 forecasts in a Bloomberg News survey.


The range of estimates of economists surveyed ran from a decline of 3.9 percent to a gain of 1 percent. Commerce revised the April gain from a previously reported 1.9 percent increase. "



The last sentence is very telling. There were 75 forecasts and no one was within was even close to getting it right. How can that be? Well, that means something must have moved the data or the economists are really bad at their job (probably a little of both).

After looking at the raw data we can see that new orders jumped about $2.8 billion in May, but when you dig a little deeper you see one number really jumps off the page. A 68% monthly increase in non-defense aircraft parts for $2.7 billion. While this looks like a strong move, consider that the number is still down over 70% from a year ago. I suppose airlines can only avoid repairs for so long and then they have to start buying parts to keep their planes in the sky. Again, this one volatile category (plane parts) accounted for almost all of the gain in new orders. It's not a very strong green shoot to hang your hat on.

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From The Bond Buyer via Infectious Greed:

Unless lawmakers act quickly to solve the state’s budget and cash crises, California is eight days away from issuing IOUs to many of its creditors, state Controller John Chiang announced this morning.


Without such action, Chiang said his office will begin issuing registered warrants on July 2 to private businesses, local governments, and owners of unclaimed property owed money by the state government, as well as taxpayers due income tax refunds.


Cheers!

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