Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  New Orders for Durable Goods Declined 1.7% in April
Posted Under: Data Watch • Durable Goods

 
Implications:  A drop in commercial aircraft orders in April – following large gains in February and March – overshadowed an otherwise healthy durable goods report.  Excluding the typically volatile transportation sector, orders rose 0.9% in April as nearly all major categories showed gains, led by fabricated metal products and electrical equipment, appliances & components.  More importantly, and even including downward revisions to prior months, the trend in orders (both including and excluding transportation) continues to show a pickup in the pace of activity. This is in part due to the shift to full tax expensing of business investments instead of depreciation over several years, paired with tax cuts that increase the value of new business projects.  We expect these will continue to serve as a tailwind (particularly for machinery orders) through the remainder of 2018 and into 2019.  Among the best news in today's report was a 0.8% increase in shipments for non-defense capital goods excluding aircraft.  If unchanged in May and June, these "core" shipments – the calculation most relevant to government calculations of business investment for GDP purposes – will be up at a 2.9% annualized rate in Q2 versus the Q1 average.  Unfortunately, today's report also included downward revisions to first quarter data, which, paired with other economic data since the initial estimate, suggests real GDP growth of 2.2% in the first quarter, down from the government's initial estimate of 2.3%. As we noted in a recent Monday Morning Outlook, don't view moderate first quarter growth as a sign that the economy isn't picking up pace.  It is.  We are still penciling-in a 4.0% growth rate in Q2 and anticipate average growth of around 3% for 2018.  In sum, today's report of healthy economic growth gives yet another reason investors should be feeling optimistic heading into the holiday weekend. So enjoy the long weekend, remember those that have fought to protect our freedom, and rest easy knowing the economy is doing fine.   

Click here for a PDF version
Posted on Friday, May 25, 2018 @ 10:11 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial advisors are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2019 All rights reserved.