Durable Goods Orders: Not as Bad as They Seem?

Includes: DIA, IVV, SPY
by: William Trent, CFA

According to the Census Bureau, new orders for manufactured durable goods in February decreased $3.6 billion or 1.7 percent to $210.6 billion, the second consecutive monthly decrease following a 4.7 percent January decrease. Tony Crescenzi says this report is consistent with a recession, and the market seems to agree.

However, suppose the news release had read “new orders for manufactured durable goods in February increased $8.4 billion or 4.3% to $208.1 billion compared to the year-ago period. This marks the third consecutive monthly increase, following year/year gains of 4.2% in both December and January.”

Would the market have reacted more kindly to that rephrased release? It isn’t an academic question, because either paragraph is technically correct. The Census Bureau, as is its custom, reported the one-month change after making seasonal adjustments. My alternate version simply takes the one-year change in the data before the adjustments are made.