COVID-19 Economic Data: Durable Goods Orders Plummet in March

By at 24 April, 2020, 3:47 pm

by Raymond J. Keating-

The March durable goods new orders report from the U.S. Census Bureau was, as expected, not pretty. The topline number pointed to durable goods orders diving by 14.4 percent in November.

Excluding two months in 2014 when we experienced a big one month jump followed by a big one month fall, this decline in March was the largest in a data set going back to 1992.

Source: Federal Reserve Bank of St. Louis, FRED

Looking at the capital investment data, capital goods orders plummeted by 26.8 percent in March. And when we crawl inside those numbers, nondefense capital goods orders declined by 33.4 percent.

And finally, the widely watched nondefense capital goods excluding aircraft – which offers a measure of private investment in equipment and software – was basically flat, increasing by 0.1 percent. The fact that this measure didn’t tank in March was something, I guess, to latch on to in a “well-it-could-have-been-worse” kind of way.

However, as noted in the following chart, nondefense capital goods excluding aircraft investment has been stagnant since the summer of 2018, and expectations are that we’ll see a big decline in coming months.

Source: Federal Reserve Bank of St. Louis, FRED

All of this reflects the Herculean challenges our economy will face coming out of this coronavirus crisis and shutdown. We will need to see a reignition of entrepreneurship and investment, and in order for that to happen, policymakers will have to shift course dramatically, away form crisis aid to reining in the size, scope and burdens of government so that risk taking – namely, entrepreneurship and investment – are free to flourish.

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


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