Durable Goods, Beige Book

My pal Larry Kudlow is apoplectic over the upside surprise in Durable Goods. They rose 0.8% headline and 2% ex transports versus consensus estimates of a decline of 0.3% and 0.2% ex transports. Leading the gains was an increase in orders for electrical equipment, machinery, vehicles and parts, primary and fabricated metals.

Miller Tabak’s Peter Boockvar notes that "the Govt stimulus package has a depreciation tax credit that expires by year end — so companies have to now use it or lose it. That could have had an impact on order rates but we need more than one month’s data to see by how much."

Regardless, as we have said many times, watch the overall trend, not a single report.


Charts by Jake

Let’s see what sectors are expanding and contracting, via the Federal Reserve Beige Book:


Contracting sectors
Residential real estate
Department Stores 
Home Improvement 
Office/Shopping Mall Real Estate 
Wood Products
Construction Equipment
Trucking Transports 
SUV’s/Light Trucks
Job Placement Agencies 
Environmental Services
Chemical manufacturing 

Neutral sectors 
Discount Stores
Tourism (local>far-away destination)   
Rail Transports 
Fuel Efficient Cars/Hybrids 
Electronics (boost from tax rebates)   
Food Retailing
Steel Producers

Expanding sectors 
Tech services 
Health Care/Pharma
Oil/Natural Gas Drilling 
Wind Turbine Parts 
Food Manufacturing 
Specialty Aircraft Parts 


Sources: Federal Reserve, Merrill Lynch, Miller Tabak

Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders  June 2008
Manufacturing and Construction Division, Commerce Department, JULY 25, 2008,

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What's been said:

Discussions found on the web:
  1. Halfdan commented on Jul 25

    He’s “apoplectic”??? I do not think it means what you think it means…


    BR: So excited, he was about to burst a vessel or have a seizure!

  2. Mike in NOLa commented on Jul 25

    I suppose that’s the pep rally theme for today on CNBC.

  3. Michael Donnelly commented on Jul 25

    Let’s all calm down here. Don’t forget about June’s Industrial Production report. Remember we had a big 0.5% gain? But that was a bizarre number for one reason. The entire gain was from truck production up 9% for the month.

    You think truck sales went up 9%? I got a bridge to sell ya.

    The automakers used up all their material making the 9% gain in trucks and the 3% gain in autos, and in the same month they ordered 5% more metal. I don’t know why GM & Ford are inventory happy, but it isn’t something to get excited about.

  4. Gloomy Observer commented on Jul 25

    Even as a seasoned CNBC mocker I was taken aback by the level of Panglossian myopia on display after that release. If I heard it all correctly:

    (i) it marks a definitive turning point in the economic cycle;
    (ii) the Fed can now start tightening again;
    (iii) it has NOTHING to do with the weak dollar, just “great US products”;
    (iv) Phil Gramm was right – this is just a “mental recession”;
    (v) Q2 GDP will print around 3%, so what are we worried about?; and, of course –
    (vi) buy stocks!!

    Barry, I have been a regular reader for a long time and would like to echo what some others have asked: is the CNBC crew’s optimism real, or are they just paid to cheerlead like that?

    I ask, as I used to work with an economist who resolutely bought the “Kudlow line”. I made the case to him clearly in 2004,5,6 that the housing market was a bubble, the economy was headed for the rocks, external imbalances as a dollar risk etc. He would then fly into a rage and literally rant…he even called the idea that Euro:USD could go to 1.60… “immoral” and “dangerous”(!). So he WAS the real deal…

    How about the CNBC guys- cynical shills or true believers?

  5. josh commented on Jul 25

    “apoplectic” – to “stroke out” like kudlow loves to do…..very good use of the wprd BR.

  6. yourkillingmelarry commented on Jul 25


    Defense spending helps lift durable goods orders
    Friday July 25, 9:15 am ET
    By Martin Crutsinger, AP Economics Writer
    Big-ticket factory orders rose at fastest pace in 4 months, helped by defense spending

    WASHINGTON (AP) — Orders to factories for big-ticket manufactured goods such as cars, appliances and machinery rose at the fastest pace in four months in June. While the increase was much stronger than had been expected, much of the strength was related to heavy defense spending.

    The Commerce Department reported Friday that orders for durable goods increased 0.8 percent last month, far better than the 0.4 percent decline that economists had been expecting. However, excluding demand for defense equipment, total orders would have been up a much more modest 0.1 percent.

    Analysts said that the June performance was being propped up by sizable military spending for equipment, reflecting the ongoing wars in Iraq and Afghanistan, and this was offsetting widespread weakness in the rest of the economy.

    “With orders excluding defense falling at a 4 percent annualized rate in the second quarter, it is pretty clear manufacturing is hardly thriving,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics.


    It just goes to show “It’s always something”.

  7. dgoverde commented on Jul 25


    Kudlow wouldn’t have to be in a rage to validate Barry’s usage of the word. He would just have to be so excited that he might be inviting a seizure. Red in the face, whether from anger or exuberance, would suffice.


  8. Mike in NOLa commented on Jul 25

    Oh happy day!

    Home sales and consumer sentiment also both beat estimates. No recession. Everybody can to the mall now.

  9. CNBC Sucks commented on Jul 25

    I haven’t looked up apoplectic yet, but if it means “liar”, then I am in total agreement. I know BR is sweet on Larry Kudlow because Kudlow is nice to him in private, but that man’s on-air misinformation needs to be stopped. He is worse than Bill O’Reilly and at least O’Reilly has entertainment value. I don’t know how CNBC gets away with its daily stock pimping without the SEC and / or FCC providing some sort of oversight. It is one thing for experts on two sides of an economic argument to debate, but when the anchorpeople, moderators, and reporters are even more enthusiastic than their guests at promoting a bullish picture of the economy, the stock market, and specific investments, then that is unhealthy or even dangerous to the American public, especially for those less informed than people who participate on this blog. In my mind, CNBC has become worse than Fox News. Depending on your political viewpoint, you can enjoy or hate Fox News, but you won’t lose your life savings based on anything you watch on it.

  10. lurker commented on Jul 25

    Since war is our only growth “industry” maybe we should start dropping empty houses on our enemies???? Hey, it worked in the Wizard of Oz, and I don’t think Kansas had that much unsold inventory in those days either…

  11. Winston Munn commented on Jul 25

    “WASHINGTON (AP) — While the increase was much stronger than had been expected, much of the strength was related to heavy defense spending.”

    Surely this must be some kind of contrary indicator – AP reporting the facts behind the headline number.

  12. Steve Dodell commented on Jul 25

    Number heavy on defense spending…Crecenzi also points out tremendous rise in metal prices.

    All this proves is :

    1) we are wasting too much money in Iraq
    2) economists can’t predict crap
    3) commodity prices are out of control
    4) stock investors are largely a pathetic, greedy, impulsive lot

  13. Juhuti commented on Jul 25

    it’s been over 1 1/2 hours and they still haven’t put the actual pdf/xls file for Durable Goods up on the census.gov website. Is this a blatant manipulation?

  14. Halfdan commented on Jul 25


    Technically true.

  15. Jeff commented on Jul 25

    Isn’t it true that CNBC’s viewership/ratings basically tank in a bear market? Didn’t the channel fall off a cliff in after the dot.com bust? Well, there’s your reason for the cheerleading.

    It’s also a fact that that Americans generally won’t tune in if the tone is too downbeat – – we’re a country of little children who can’t stand bad news – hence 8 years of the moron also known as GWB and the continual denial about the economy, markets, and overall state of the nation now. We would rather stay mired in the “sunny optimism of Reagan” than face reality until the ship is basically at the bottom of the ocean.

  16. CharmCity commented on Jul 25

    Where are the orders coming from? That is the question.

  17. Stuart commented on Jul 25

    CNBC sucks, well stated. They need their asses sued off by being a willing participant in corralling the public into the bank’s pump and dump schemes. Periodically they have someone who is counter to their spin, purely obligatory to provide proof of attempted objectivity, yet, it is clear they are a media shill for those firms who do not have the public’s best interest at heart.

  18. Paul in NYC commented on Jul 25

    Steve Dodell points out more money is being spent on less total transactions, and even fewer in the private sector. Seems pretty obvious we are still in a weakening trend.

  19. Mike in NOLa commented on Jul 25

    I had told a friend back at the top of the tech bubble that the indicator of a true bottom was going to be CNBC going off the air, but I guess that’s too much to hope for. Those who support the establishment are protected.

    Someone had an interesting post somewhere about one of the big effects of Cox’s witch hunt was sources of negative blog info drying up because those sources were generally short and were afraid of the SEC, even if they were giving truthful info; it just wasn’t worth the hassle.

  20. MitchN commented on Jul 25

    How about that Michelle Cabrera? What a shill. She should be wearing a sweater with a big “E” on the front and waving a pair of pom-poms.

  21. Greg0658 commented on Jul 25

    Where are the orders coming from? That is the question. Posted by: CharmCity

    Can you sell your own stock to yourself? And for how long?

  22. wunsacon commented on Jul 25

    >> Since war is our only growth “industry” maybe we should start dropping empty houses on our enemies????

    Lurker, LOL! Indeed, if the houses survive the fall, Iraqis can move in. We might even win some hearts and minds that way. (“Look! Granite counter tops!”)

  23. John doe commented on Jul 25

    Primary metals…prices for primary metals increased in June from May, so the extra $1 billion was simply price increases, not necessarily an increase in orders.

  24. donna commented on Jul 25

    Is this the T. Boone Pickens wind turbine effect? ;^)

  25. Francois commented on Jul 25

    “With orders excluding defense falling at a 4 percent annualized rate in the second quarter, it is pretty clear manufacturing is hardly thriving,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

    Hmmm! We tend to forget we’re involved in 2 wars. Tsk tsk tsk!

    “Surely this must be some kind of contrary indicator – AP reporting the facts behind the headline number.”


  26. Steve commented on Jul 25

    Durable goods orders up?

    Some people must seriously concerned about INFLATION.

    Inflation Baby! Yeah!

    It’s all about the expectations isn’t it? Yes.

  27. DL commented on Jul 25

    Short sellers ought to be thankful for all the cheerleading that goes on with CNBC. The journalists convince gullible investors to bid up prices so that the shorts can establish positions at higher levels.

    Keep up the good work, CNBC.

  28. Marc commented on Jul 25

    I’m amazed that good economic numbers are making you guys unhappy. Isn’t economic growth a good thing?

    Oh I’m sure that there an economic report number out there that taken ex-something won’t look so hot. So let’s rally around this and three cheers for the ensuing depression.

    You guys actually watch CNBC? I prefer the comedy channel, the jokes are better.


  29. VJ commented on Jul 25

    AP: Defense spending helps lift durable goods orders

    As the Church Lady used to say, “Well, isn’t that conveeeeenient !“.

  30. BG commented on Jul 25

    Since we are commenting on the obvious pumping that goes on incessantly on CNBC. My market indicator I am looking for is when Cramer gets caught up in some kind of insider information trading scheme and is immediately dropped from the network.

    As far as Larry goes, he is so enthusiastically obvious, any one with half a brain had better hold onto their wallet with both hands.

    In a way, I kinda feel sorry for the Republicans. Everything they have touch in the last (8) years has turned to absolute shit without question. I really can’t think of a single thing that they did during that time that was a real benefit to the American people. Really, I can’t think of a single one. Can you? (Tax-breaks for the rich don’t count.)

    A good example of their luck was the exchange and subsequent outcome of McCain’s challenge to Obama about having not gone to Iraq or Afganistan. Look what happened! He had them all falling all over each other once he got there. McCain for the most part, totally silent. So Obama has now upstaged McCain in his strongest area – foreign affairs and the military. It truly is amazing to watch Obama work. He continues to defy all skeptics.

    IMO, Obama overstepped his authority while on his Middle East (ME) trip. He also upstaged Bush as well. Obama needs to remember, he is NOT yet the President and should show courtesy to the Office and back off a little bit. He will be there soon enough; but, he is not there yet and should cool it on international policy.

    On a much lighter and enjoyable note, a few days back we were critiqueing (sp.?) different media folks at CNBC. I provided my list and was very proud of my picks; however, I must admit I made a serious mistake in leaving one name off of my “Best” List.

    I found this gem on “CNBC Worldwide Exchange”. This is the early morning show covering markets in Europe, Far-East, Asia, London and the pre-US. My miss was SAIJAL PATEL in Singapore! WOW! I am up at that time of the morning doing my exercise regimen and I just about go into cardiact arrest every time I see her! Oh God, she is so hot and so sweet!! She makes my heart flutter big time. Check her out if you are up between 4AM and 6AM EST. You won’t be disappointed, I guarantee it! She is absolutely gorgeous! She is also very articulate considering English is probably not her first language.

  31. Marc commented on Jul 25

    I would like to see a chart of everyone who visits this site that voted for Bush. Most financial people I know seem to think that tax cuts are good for them no matter what and consider themselves Republicans.

    Maybe on next years 1040, the IRS could put a line item that says “I voted for George Bush, please take out $____ of my refund to help repair the damage.”


  32. CNBC Sucks commented on Jul 25

    Hey BG, you obviously have not seen this excellent blog on CNBC US that some genius put together, http://cnbcsucks.wordpress.com . It features every bit of speculative news, opinion, and features on your favorite personalities at CNBC US, and even covers international stars such as Amanda Drury when they do a temporary stint for CNBC US just so they can have a shopping trip to Manhattan right before the Fourth of July. Whoever that blogger is, he is a genius.

  33. LeoS commented on Jul 25

    Durable goods orders are tracked in part because they once reflected the vigor of the US economy – it is a stand-in for capital spending, a leading indicator of future expansion. As such it is a metric for our old economy. In addition to the oft-mentioned factors of military orders and inflation as reasons the number does not reflect ecomonic vibrancy is the fact that a rising portion of these orders are exports. Exports are good for our remaining domestic manufacturing sector, but they sure do not indicate reverberating strength throughout an expanding economy that is ordering capital goods.

  34. DaveinHackensack commented on Jul 25

    What a surprise, oil & gas drilling is one of the expanding sectors. Wouldn’t it be great if Congress opened up more federal lands and waters to oil & gas drilling? It would create a lot more high paying jobs in the energy sector and in manufacturing (e.g., building the needed rigs, etc.); it would increase government revenues (through royalty payments); and, eventually, reduce our trade deficit as new supplies of domestic oil come on stream.

  35. CNBC Sucks commented on Jul 25

    It would do everything but find economically recoverable oil.

  36. VJ commented on Jul 26


    A good example of their luck was the exchange and subsequent outcome of McCain’s challenge to Obama about having not gone to Iraq or Afganistan. Look what happened! He had them all falling all over each other once he got there. McCain for the most part, totally silent. So Obama has now upstaged McCain in his strongest area – foreign affairs and the military. It truly is amazing to watch Obama work. He continues to defy all skeptics.

    Yet he continues to decline in the polls in the swing states. Without Ohio and Florida, it’s a tough road to 270.

  37. VJ commented on Jul 26


    Wouldn’t it be great if Congress opened up more federal lands and waters to oil & gas drilling?

    Big Oil already has leases on 68 million acres of federal land, 41 million of it off-shore, where 79% of the country’s crude oil reserves are located. They are only drilling on about 10 million acres.

    Who’s stopping them ?

  38. VJ commented on Jul 26


    It was interesting in the Democratic primary to read the number of people who openly admitted to the Clintons’ guilt…

    Of what ?

    Me, I’m going to vote for McCain, not because I like McCain but because I think he is the best bet to persuade the country and the Congress to make some very necessary changes.

    What “changes” ?

    He’s advocating plowing the very same ditch we’ve been in for the last eight years.

    Clinton was a much wiser and more experienced candidate and he accomplished almost nothing in both terms that wasn’t acceded to by a hostile, skeptical Republican Congress.

    And what cave were you living in at the time ?

  39. VJ commented on Jul 26


    Well, we could start with Bill perjuring himself to a Federal grand jury.

    Never happened.

    You are obviously unaware that during the bogus impeachment, President Clinton’s attorneys requested, first from the House and then from the Senate, the EXACT WORDS they claimed were perjurious.

    They provided no specifics.

    You know, the perjury he later admitted to committing in his book.

    Quote and page number ?

    We could continue on with his felonious pardons, the one for Marc Rich being the most egregiously offensive but there were others almost as bad.

    There were NUMEROUS congressional investigations.


    As to Marc Rich, the Justice Department turned what was normally a civil prosecution into a criminal prosecution, even though two eminent independent tax law professors (Martin Ginsburg of Georgetown and Bernard Wolfman of Harvard) concluded, contrary to the Justice Department’s contention, that Rich’s companies actually owed no taxes.

    Therefore, President Clinton’s pardon only covered any criminal prosecution, but left Rich wide open for any routine civil prosecution. To this day, the Justice Department has not pursued the matter, further evidence that there were other motives involved and President Clinton made the correct call.

    We could go on and talk about the Riadys, and the Chinese military

    Yes, but it isn’t quite the same since you quite obviously have your tin foil hat constructed with the shiny side facing in.

    If you really don’t think that the Clintons were the most venal and corrupt lot ever to inhabit the WH, you don’t know much about Presidential history.

    Unfortunately, your polemic screed indicates you are mired down in a bog of RightWing propaganda and have no comprehension of either history or reality.

    A) There wasn’t a single member of the Clinton administration ever even indicted in their official capacity, which is a STARK contrast to both the two previous Republican administrations and the current Republican administration’s litany of criminalities.

    B) The American people disagree with you. President Clinton left office with the highest approval rating of any President since Franklin Delano Roosevelt. Of course, the American RightWing hated him as well.

    As for Clinton getting anything done that the Republicans didn’t agree to, the answer is that he didn’t.

    The 1993 budget and tax legislation passed the Congress with EVERY SINGLE Republican in both houses voting against, it:

    * Raised taxes on the top 1.2% of income earners and raised the Corporate Tax rate. The increased revenue was utilized to pay down $550 billion of the Reagan/Bush federal debt, which even Greenspan testified to a Congressional committee had “a dramatic effect on improving the economy”. This led to transforming the previous 12 years of year after year record federal budget deficits to a net federal budget surplus by the Summer of 1994, and eventually to federal budget surpluses in ’98, ’99, and 2000. (Of course, the federal budget deficits once again increased to record highs after 2000)

    * Expanded the ‘Earned Income Tax Credit’, which provided tax relief to 15 million hard-pressed working families and lifted 4.1 million people out of poverty.

    * Enacted a $500 per-child tax credit for 27 million families with 45 million children. The largest tax cut for typical American families in decades.

    * Provided more than $77 billion in loans to small businesses, more than than the SBA provided in the previous 25 years combined. Provided $17.5 billion in loans to 77,000 minority-owned businesses and $11.7 billion in loans to 79,000 women, more than the SBA provided in total during its entire previous 40 years.

    * Enacted the largest investment in education in 30 years with the largest investment in higher education since the G.I. Bill by doubling student aid to nearly $60 billion.

    * Established the new ‘Direct Student Loan’ program which bypassed federally guaranteed lenders to deliver loans directly to students which was both quicker and cheaper. Students and taxpayers saved $15 billion. The student loan default rate declined from 22.4% in 1990, to 6.9%, the lowest rate ever. (This policy was reversed by the current administration, and given back to the banks for more profit, thereby raising the cost to both students and taxpayers)

    * Enacted the ‘Family and Medical Leave Act’ which allows workers to take up to 12 weeks of unpaid leave to care for seriously ill family members, new born or adoptive children, or their own serious health problems without fear of losing their jobs. Nearly 91 million workers (71% of the labor force) are covered by the Family and Medical Leave Act and millions of workers have benefited from FMLA since its enactment, which increased worker productivity.

    That’s the very short list. The results ?:

    * There were 22.2 million net new jobs created, the most jobs ever created under a single administration, and more jobs than Reagan/PoppyBush/Chimpy Bush created during their five terms COMBINED, with the majority created during the Clinton administration paying higher than the average wage in the national economy.

    * The Unemployment Rate fell for eight years in a row, as the National Labor Participation Rate increased (what a concept !). African-American unemployment was cut in half to its lowest level ever recorded, and Hispanic unemployment fell to the lowest level ever recorded.

    * The longest consecutive yearly increase of real wage growth since the 1960s. (Of course, real wages declined every year after 2000).

    * The overall poverty rate continuously declined every single year, falling from 15.1% in 1993 to 11.3% in 2000, including the largest six-year drop in poverty in nearly three decades. The child poverty rate declined from 22.7% to 18.9%, the largest drop in three decades. (Of course, the overall poverty rate subsequently reversed and rose every single year after 2000).

  40. VJ commented on Jul 27


    Since you’ve decided to turn a discussion into an insult fest

    Ah, ya can dish it out, but you can’t take it. Typical RightWinger.

    President Clinton will leave office free of the prospect of criminal charges after he admitted Friday that he knowingly gave misleading testimony about his affair with Monica Lewinsky in a 1998 lawsuit.

    You are obviously unaware that the Supreme Court has held that providing “misleading testimony” under oath is PERFECTLY LEGAL.

    Your ignorance of legal precedent is showing.

    Under an agreement with Independent Counsel Robert Ray, Clinton’s law license will be suspended for five years…

    President Clinton’s law license was NOT suspended, for five years or any period of time.

    ” ‘I tried to walk a fine line between acting lawfully and testifying falsely, but I now recognize that I did not fully accomplish this goal and am certain my responses to questions about Ms. Lewinsky were false,’ Clinton said in a written statement released Friday by the White House.”

    The Supreme Court has held that “False” is not in itself perjurious.

    Once again, your ignorance of legal precedent is showing.

    You must have forgotten that President Clinton was a professor of Constitutional law.

    The rest of your argument is just as easily rebutted…

    HA !

    You have rebutted nothing.

    * Where is the QUOTE from President Clinton that he committed perjury that YOU asserted ?

    * Where are the felonies YOU asserted ?

    * Where is the corruption YOU asserted ?

    * Where are the lack of accomplishments without the Republicans that YOU asserted ?

    You’re entitled to your own opinion but you’re not entitled to your own facts.

    Indeed. Try a mirror, Choko.

    You’re the one still drinkin’ the RightWing Kool-Aid.

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