Implications: Durable goods orders pulled back slightly in September, but it was entirely due to the typically volatile transportation sector that can (and does) swing wildly from month to month. Strip out transportation, and durable goods rose 0.4%. The details of today's report show activity across the major sectors was mixed, with orders for machinery (+1.1%), fabricated metal products (+0.7%), and primary metals (+0.6%) rising while electrical equipment and appliances (-0.5%) and computers & electronic products (-0.3%) declined. On a year-ago basis, durable goods orders are up a massive 15.3% from September 2020. 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), rose 1.4% in September, coming in well above the consensus expected 0.5%. These shipments rose at a 10.6% annualized rate in the third quarter. Some will focus on the fact that quarterly growth rates in this measure of business investment have slowed: 39.9% annualized growth rate in Q3 2020, 17.8% annualized growth in Q4, 11.3% annualized growth in the first quarter of 2021, and 10.6% annualized growth in both Q2 and Q3 of this year. But it's important to remember that activity is being held back by the supply chain disruptions that continue to hold supply back from fulfilling strong demand. The governmental interference in the free market system – shutting down activity while at the same time adding unprecedented stimulus – threw sand in the gears of the economic machine. Actions have consequences, and we will continue to be impacted by Washington's decisions for the foreseeable future.
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