Tuesday’s top economic report was the durable goods report for December, and unfortunately it is a very ugly number. The headline durable goods report from the Commerce Department was negative and down by 4.3% in December. Even the ex-transportation report was negative at -1.6%.
Bloomberg was calling for a headline gain of 1.6%, but that was only a gain expected of 0.7% if you back out the transportation orders. Dow Jones was calling for a gain of 1.5% on the headline.
Be advised that each durable goods report is subject to being the most volatile of all major economic reports. That being said, even a report this ugly cannot simply be washed away by saying “it is always volatile and maybe weather is to blame.”
To add insult on top of injury, November’s durable goods figure was revised downward to 2.6% from 3.4% initially reported. The ex-transportation durable goods orders for November were also revised lower, down to 0.1% from 1.2%.
Business spending was weak, with non-defense capital goods (ex-aircraft spending) down by 1.3%, but this was down 2.6% in November. Auto spending was down by 5.8%, and computers and electronics were down by 7.8%.
The durable goods report sets up a negative tone for the first look at fourth-quarter gross domestic product (GDP), due on Thursday morning. That is the preliminary report, and Bloomberg is calling for a gain of 3.0% on the headline GDP and a gain of 1.2% if you use the price index.
Amazingly, this report has had very little impact on the markets. DJIA futures are up 66 points and S&P 500 futures are up seven points. Maybe this is just one more hope that the Fed will not taper too much more at this week’s FOMC meeting.