Implications:  The headline number from today's durable goods report looks like a lump of coal, as orders declined 2.0%, falling well short of even the most pessimistic estimate from any forecasting group.  That said, the dip was due to the volatile aircraft sector, particularly defense aircraft; excluding transportation, new orders were unchanged in November.  Strip out defense, and new orders for durable goods rose 0.8% in November.  Outside of transportation, a pickup in orders for electrical equipment, computers, and fabricated metal products were offset by an outsized decline in orders for machinery.  One of the most important pieces of data from today's report, shipments of "core" non-defense capital goods ex-aircraft (a key input for business investment in the calculation of GDP growth), declined 0.3% in November and is down in four of the last five months.  If this measure remains unchanged in December, shipments will be down at a 0.2% annualized rate in Q4 versus the Q3 average.  While shipments for these orders were down on the month, new orders rose 0.1% in November following a 1.1% increase in October, suggesting shipments will not continue to decline.  We expect the rate of GDP growth to move higher in the fourth quarter, especially if the weight on growth from weak business investment spending abates. The Phase 1 trade deal with China agreed in early December (and as such, not reflected in today's report) should help reduce some of the uncertainty surrounding investment decisions going forward, and we expect this to be reflected in the data early in the new year.  Today's report could certainly have been better, but it's not as bad as the headline number makes it seem.  The economy remains on solid footing as we close out a year where the markets gave us plenty of reason for cheer.

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