- by New Deal democrat
One of the things I occasionally pat myself on the back about is spotting new trends first. Such was the case one year ago, in the midst of the “mini-recession,” noticing that the regional Feds’ manufacturing indexes, which had languished for several years, were turning positive. Thus began the theme of an AI data center construction driven manufacturing rebound.
This year that trend has continued and even intensified. Which brings us to this morning’s report on durable goods orders for August.
The headline number for new durable goods orders by manufacturers (blue) was unchanged, but the much less noisy core capital goods number (red) increased a sharp 1.6%. The latter made a new all time high, as did the three month average (which takes out most of the noise) of the former. In the graph below, both are normed to 100 as of their pre-pandemic expansion highs in 2018:
And that’s not all. On a YoY% basis, new orders increased 8.5%, while core capital goods orders were up 14.1%. The below graph subtracts those values to show the current YoY gains at the “0” line:
The current Boom in the growth of manufacturing orders is equivalent to all of the best times in the last 30+ years except for the brief white-hot immediate post-pandemic Boom.
Finally, let’s compare that with industrial production in the manufacturing sector (orange), which did decline slightly in August; but the sharply increasing trend is similar:
One of the things I have learned over the past 20+ years that I have been doing this is just how hard it is to derail the U.S. economy. When several sectors point to a sharp downturn, most often another sector comes sneaking out of the shadows to power an upturn. And so, despite the incompetence and malignancy of the current Administration, so far the economy as a whole is refusing to buckle, despite important things like real incomes for most ordinary Americans turning down.
