Orders for durable goods that are expected to last three years or longer fell 5.7% on March. This was a substantial decline.
For the year, durable goods orders are unchanged from a year ago.
Durable goods purchases indicate the willingness of Americans to buy goods that are not the normal day-by-day goods, which tend to be less subject to swings. Durable goods orders indicate people’s willingness to make longer-term commitments to buy higher-priced goods.
People can usually postpone the purchase of durable goods. So, when orders decline, economists start looking for reasons. A decline usually indicates a growing lack of confidence in the jobs market and the economy in general. People get scared, so they cut back on purchases of non-essentials. If they can postpone a purchase, they do.
Europe is in a recession. Japan is, too. The United States seems to be swimming upstream against an economic slowdown. So, economists look for signs that the international economy is dragging down America’s economy. Is our economy a port in the storm or a sign that the storm is clearing?
Most economists generally think that the USA will avoid Europe’s fate in 2013. But economists as a group never forecast a recession. They always think that economic growth will continue. When the federal deficit is $1 trillion a year and Federal Reserve bond buying is too, Keynesians do not have an explanation for how an economy could move into a recession. They forget about the fact that federal deficits take capital out of the private sector.
Governments do not create jobs without destroying jobs.