Thursday morning, the Census Bureau reported the latest data on new orders for durable goods. As usual, all eyes were on the ex-transportation component, which unexpectedly fell 0.6 percent in January, sending economists scurrying to figure out why the economy is not doing what they said it will.
Admittedly, month-to-month changes don't tell a whole lot. After looking through the data going back several years, however, one trend seems to stand out: the growing impact of public spending on the overall total. Although the relationship has been somewhat volatile on a monthly basis, it's clear that defense-related outlays, for example, have accounted for an increasing share of orders for products that are expected to last more than three years.
During the last 17 years or so, the median value of the ratio of defense-related orders to the overall orders number has been 4.4 percent. However, since the recession began (in December 2007), the average has been 6.6 percent. Last month, it hit 8 percent. As with other areas of the economy where the government appears to be playing an important role, it's worth bearing in mind that the "recovery" may not be all that it seems.