July 08 Durable Goods

--It provides solid clues that consumers, especially corporations, are more willing to invest. It is a good sign, indicating that economy will bottom out soon. Analysts claimed the surprising increase was fueled by weak dollars.

--New orders increased 1.3%, reflecting more demand for druable goods. The figure in June 08 was revised upward 1.3%. --Capital Goods, especially non-defense cap good, an important item reflecting corporations' invesment spending, increased 1.6%. Small corporations (Capital goods non-defense and ex aircraft) increased 0.6%, growing months in a row.

--The chart on the left shows the shipped non-defense ex aircraft capital goods on the quarterly basis. A sharp drop occured during each recession. Surprisingly, there has been no major decline since mid of 2005.

--It is hard to argue that weak dollar is keeping up the capital goods spending. Looking at the GDP export, the QoQ average growth rate was 8% before Q3 06 and averagely increased to 9% until Q2 08.

--If the history offers a lesson, it tells us that the economy probably has not entered a recesion yet, and might not this year. That might partially explaines no official annoucement of recession yet.

--The chart on the right shows the new orders of non-defense ex aircraft capital goods on the quarterly basis. It further indicates that economy has not entered a recession yet.