PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Economic Data: Durable Goods Take a Dive in April

By at 24 May, 2019, 11:26 am

 

by Raymond J. Keating-

Durable goods orders took a dive in April, according to the latest report from the U.S. Bureau of Census.

Durable goods orders dropped by 2.1 percent in April. In addition, March orders were revised down from an increase of 2.6 percent to 1.7 percent.

The big negative in April was a plunge of 25.1 percent in aircraft orders, thanks to Boeing’s woes. Also, motor vehicles orders declined by 3.4 percent.

In terms of investment, capital goods were down by 3.5 percent; and nondefense capital goods off by 5.0 percent.

The change in nondefense capital goods excluding aircraft orders serves as a measure of private investment in equipment and software. For April, these new orders declined by 0.9 percent, following on gains of 0.3 percent in both March and February.

As noted in the following graph, after solid growth in nondefense capital goods excluding aircraft orders from the start of 2017 to October 2018, for the past six months, the story has been one of slight decline. That’s troubling given that private business investment has been an important part of the economic growth story since the start of 2017.

 

Source: The Federal Reserve Bank of St. Louis, FRED

These recent numbers line up with a worrisome recent trend in industrial production, as SBE Council has highlighted.

Looking to policy for answers, it’s clear that the additional costs and uncertainties created by misguided trade policy  – that is, increased U.S. tariffs, retaliation by trading partners, and serious questions as to where matters are headed on several major trade issues (see a tally of total tariff costs from the American Action Forum here) – is taking a toll on the economy.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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