Slump in Durable Goods

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Long lasting equipment is more than just man made machinery or cars or replaceable household appliances. In fact these orders are a significant marker that tells of the status of the economy and can be used as a signal in an environment filled with contradictory markers and much noise.

  

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Economists understand durable goods orders in a complex  correlation with U.S. economic growth; according to Bloomberg, “Orders for long-lasting equipment unexpectedly slumped in December by the most in five months, indicating companies are less sure than households that the U.S. economy is strengthening.”

Consumer confidence data showed that the majority of Americans perceived that their economy was improving. Stocks rebounded from their June low, and th Standard and Poor index went up by 0.6 percent to 1792.5 at the day’s close.

Comparatively, overseas economies also showed signs of improvement. Gross domestic product in the UK rose by .7 percent, according to the Office for National Statistics in London. The British economy ultimately grew by 19 percent. While growth in both the United Kingdom and the United States is something to cheer about, both the Federal Reserve and the Bank of England are both printing money. Quantitative Easing is the means through which the mature economies will worth through their sluggish economies into growing ones; at least at a modest rate of 2 percent.

Image Credit: Bloomberg