Courtesy of Doug Short.
Earlier today I posted a commentary on the November Advance Report on October Durable Goods Orders. This Census Bureau series dates from 1992 and is not adjusted for either population growth or inflation.
Here is a chart of the same data shown with two adjustments, the red line shows the goods orders divided by the Census Bureau’s monthly population data, giving us durable goods orders per capita. The blue line goes a step further and adjusts for inflation based on the Producer Price Index, chained in current dollars. This gives us the “real” durable goods orders per capita.
Here is the same chart, this time ex Transportation.
Now we’ll exclude Defense orders.
And finally we’ll exclude both Transportation and Defense for a better look at core durable goods consumption.
As these charts illustrate, when we study durable goods orders in the larger context of population growth and also adjust for inflation, the data becomes a coincident macro-indicator of a major shift in consumption demand within the U.S. economy. It correlates with a decline in real household incomes, as illustrated in my analysis of the most recent Census Bureau household income data:
The secular trend in durable goods orders also helps us understand the trend of declining GDP that I’ve illustrated elsewhere. See especially the most recent update on GDP.
By all four of the metrics above, the per-capita demand for durable goods has increased substantially since the trough at the end of the last recession. But orders remain substantially below their respective peaks near the turn of the century and earlier.
