Noted Economist Says You Should be Worried About Latest Durable Goods Report: Here’s Why

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This is from The Blaze.

We are going to see a crash that will make The Great Depression look mild.

We need to cut the out of control government spending.

Demand for durable goods (i.e. items that are expected to last for at least three years) is on the decline and a report released on Thursday shows that it has sunken to levels not seen since 2009 — the height of the Great Recession.

“The Commerce Department said Thursday that total durable goods orders fell 13.2 percent in August. That’s the biggest drop since January 2009 when the country was in recession. Aircraft orders fell by nearly 102 percent, pulling down the headline figure,” the Associated Press reports.

Economists had originally predicted a decline of maybe 5 percent. Obviously, they were off by just a little.

“U.S. manufacturing has weakened since the spring. Factories have been hurt by weaker consumer spending and slower global growth that has cut demand for U.S. exports,” the AP adds.

Okay, so what’s the big deal? Maybe we shouldn’t read too much into the data, right?

Well, according to economist David Rosenberg, there’s a part of the report that should raise some red flags. If you look at the three-month moving average* of non-defense capital goods orders (or “core capex [capital expenditures] orders”) excluding aircraft in Thursday’s durable goods report, you’ll note that it was 4.1 percent in August.

(*A statistical method for identifying the direction of a trend.)

“History shows when the trend weakened to the level we see today, the economy was in recession 100 percent of the time,“ Rosenberg claims in his latest ”Breakfast with Dave” note.

Furthermore, as Rosenberg notes, not only is the durable goods report obviously bad news for the manufacturing sector, but it also means bad news for the job market. You see, as the following chart illustrates, there’s an 83 percent correlation between core capex orders and jobs:

Aug. Durable Goods Report Has Economist David Rosneberg Talking About Recession

Courtesy: Business Insider

And there’s an 86 percent correlation between capex orders and the stock market:

Aug. Durable Goods Report Has Economist David Rosneberg Talking About Recession

Courtesy: Business Insider

Bottom line: Durable goods are down and manufacturing is down. According to the data presented in the above, not only does the report bode poorly for the already struggling job market, but it could also mean we’re headed for another recession.


Gasoline Prices More than Double Under Obama: $1.84 to $3.85

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This is from CNSNews.

Is this what Obama meant with his Hope and Change slogan?

I think the slogan was there is No Hope for Having any Change left.

Raising fuel prices hit all of us on fixed incomes hard.

Higher fuel prices affect our daughters education.

We home school and higher fuel prices decrease our field trips.

Higher fuel prices increase food prices,and anything delivered by vehicles. – Average retail gasoline prices have more than doubled under President Obama, according to government statistics, rising from $1.84 per gallon to $3.85 per gallon.

The average gasoline price is calculated by the Energy Information Agency, and shows that over the past 43 months of President Obama’s term retail gasoline prices have more than doubled, rising from an average of $1.84 per gallon to $3.85 per gallon.

Rising gasoline prices were particularly prevalent in August, which saw a 9.0 percent rise in the Consumer Price Index (CPI) for gasoline, a rise that almost entirely accounts for the general increase in prices seen by families across the country over the past month.

In other words, the recent spike in prices for all goods – tracked by the government’s Consumer Price Index – can be almost entirely accounted for by the rise in gasoline prices. Prices in the economy rose by 0.6 percent overall in August.

“The seasonally adjusted increase in the all items index was the largest since June 2009. About 80 percent of the increase was accounted for by the gasoline index, which rose 9.0 percent and was the major factor in the energy index rising sharply in August after declining in each of the four previous months,” the Bureau of Labor Statistics said in a press release announcing the new CPI figures for August.

Over the past twelve months, general prices have risen 1.7 percent, BLS reported.

CPI is a measure of the average change in prices for goods and services in the economy seen by consumers – making it the leading indicator of the inflation experienced directly by consumers throughout the country.



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