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Chart Of The Day: Continued Collapse In Capital Goods New Orders Confirms US Is In Recession

Tyler Durden's picture


While the just released Durable Goods orders report for October came in modestly better than expected (which many thought would be a decline due to Hurricane Sandy), the primary driver of this continues to be record durable good inventory accumulation. Excluding the noise, and focusing only on real, non-noisy economic strength metrics such as New Capital Goods Orders (technically defined as the year over year change in Non-Defense Capital Goods Excluding Aircraft), a very different and far uglier picture emerges. In fact, the October Y/Y Plunge of -8.1% in this major indicator was the biggest drop since 2009.

Curious where this collapse in New Orders is in the context of prior recessions? Here it is (shaded areas indicate NBER-defined recessions). We have never had such a steep drop in Cap Goods in the past 30 years without a concurrent recession.

To summarize: according to one of the least susceptible to manipulation indicators of US economic strength and growth, the US economy is now in a recession.

Source: St. Louis Fed

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Tue, 11/27/2012 - 10:13 | 3014025 LawsofPhysics
LawsofPhysics's picture

It is a depression, and we never left it.  SNAP, there goes the "invisible" soup line.  Stupid fucking sheep.

Tue, 11/27/2012 - 10:14 | 3014032 GetZeeGold
GetZeeGold's picture



One green chute left....grab it fast.

Tue, 11/27/2012 - 10:31 | 3014080 camaro68ss
camaro68ss's picture

Hurry bernake, we need more printed capital goods....

your our only hope

Tue, 11/27/2012 - 11:43 | 3014208 Dr. Richard Head
Dr. Richard Head's picture

Notice what happens that when welfare for warfare is taken out - no growth.  Funny.

Tue, 11/27/2012 - 12:03 | 3014329 Dalago
Dalago's picture

This wouldn't have been so extreme if only the people enstalled an Austrian based economy: http://mises.org/daily/6280/Learn-the-Austrian-Take-on-the-Great-Depress...

Tue, 11/27/2012 - 12:10 | 3014351 Hugh_Jorgan
Hugh_Jorgan's picture

It's crazy to watch former enemy states and banana republics using the supply-side economic model and having huge successes even as America abandons it in favor of the centrally planned European model that is on fire and in the process of collapse. We deserve what we get.

Tue, 11/27/2012 - 12:57 | 3014483 NidStyles
NidStyles's picture

Austrian School is not supply-side. Look I know you traders and investors have enough to worry about before you begin to understand Economics, but please. Milton Friedman is a Keynesian, as is MMT and Supply-Side. Austrian School is nothing like any of those.

Tue, 11/27/2012 - 13:21 | 3014545 OutLookingIn
OutLookingIn's picture


Ongoing Depression.

Within depressions you have some false recovery periods, but that does not alter the fact that they are taking place within the ongoing depressionary period.

History will look back on this as the 'Greater Depression II'  

Tue, 11/27/2012 - 14:25 | 3014750 economics9698
economics9698's picture

We went into depression, the government did the Freidman thing, pumped a lot of money, it acted like heroin numbing the pain.

See M-2 velocity graph.


The problem, as any Austrian (not to be confused with supply sider) is that resources are misallocated when credit is cheap.  S&L, Nasdaq, housing, and now government will be collapsing.

The solution is bankruptcy and lowering the cost of government, federal, state, and local, to no more than 25% of GDP. 

This means a end to the welfare state, bloated military, and a collapse that will last, if we are lucky, 6 to 18 months.

That’s the good part.

The bad part is the authorities can drag this out for decades, throw in some war, kill millions of goyims, and then pretend nothing happened while they live like kings all over the world.


Tue, 11/27/2012 - 14:41 | 3014817 Orly
Orly's picture

Grammar cop says:

If I am not mistaken, "goyim" is already plural, sort of like deer and deer.


But you're absolutely right.  If we took our medicine now, the duration of pain would be much less.  Maybe 24 months or a little longer.  Six months is a bit of a stretch, I think.

The worst thing that we could do now is become Japan, which we are doing at a substantially accelerated rate.

Tue, 11/27/2012 - 14:51 | 3014855 economics9698
economics9698's picture

I never took Yiddish, my bad.

Tue, 11/27/2012 - 16:51 | 3015252 Orly
Orly's picture

Okay, so you know I had to look it up...

Actually, my bad.  "Goy" means a nation, like the nation of Israel but it is not Yiddish.  It is Hebrew.

The term "goyim" is plural and means, basically, everybody else.


But none of that changes the fact that we need to have these banksters take their medicine, take their losses and sell their property for pennies on the dollar so that we can get on with our lives sooner rather than later.

Tue, 11/27/2012 - 14:24 | 3014751 Cortez
Cortez's picture

Or the 'Great Supression' since Gov't is acting like Depression doesn't exist in modern life and Recessions are just a little bug bite.  100 freakin' news channels and none are Real.

Tue, 11/27/2012 - 17:18 | 3015225 Dr. Acula
Dr. Acula's picture

>Milton Friedman is a Keynesian, as is MMT and Supply-Side.

What are these forms of "economics" exactly? Do they use the scientific method (e.g. falsifying theories through experiments)? Or are they supported by any kind of epistemology, as the Austrian School is?

They seem like bullshit to me. These guys are like the global warmists: they call themselves scientists, make predictions without ever checking them, and make baseless pronouncements. (Actually the IPCC presents "scenarios", not even predictions.)

These guys are not scientists and they are not even respectable forecasters.  They are mere con artists and tinkerers.


Tue, 11/27/2012 - 15:42 | 3015049 NotApplicable
NotApplicable's picture

Hope in one hand, shit in the other...

Tue, 11/27/2012 - 10:15 | 3014034 ejmoosa
ejmoosa's picture

The four year, multi trillion dollar dead cat bounce.

Tue, 11/27/2012 - 10:30 | 3014076 Cognitive Dissonance
Cognitive Dissonance's picture

Time to get really serious and release the dogs of QE.

<Will $10 Trillion be enough or should we do $20T?>

Tue, 11/27/2012 - 11:09 | 3014215 Dr. Richard Head
Dr. Richard Head's picture

I was having a Twitter discussion with Michael Gayed,CFA and I believe he agrees with your sarcasm.  He thinks "QE3 at $40 billion a month is nothing and that Apple's correction along was $100 biillion market cap loss in one stock.  Bonds that keep getting bids have nothing to do with yield moves."  I sure love those paper-bugs.  They have a wonderful fantasy land.

Tue, 11/27/2012 - 12:03 | 3014334 ZippyBananaPants
ZippyBananaPants's picture

Michael Gayed (MarketWatch?) is an asshole, any of the idiotic articles he writes for MW is crap, he makes up some stupid headline to get readers of the article and then when you read it, nothing but crap.  I have already commented to him after one of the articles, so this should not be news to him. 

Tue, 11/27/2012 - 10:56 | 3014175 JPM Hater001
JPM Hater001's picture

Yeah but if your going to throw just one more party this was one hell of a ride.

Ah Gatsby.

Tue, 11/27/2012 - 12:20 | 3014394 csmith
csmith's picture

24 days till Dec. 21st...Congress says F the cliff, we're going over, and the Mayans party like it's 2011...should be a fun day!

Tue, 11/27/2012 - 12:54 | 3014477 jeff montanye
jeff montanye's picture

is that george wilson creeping around the cabana bar?  serious menace but no dennis.

Tue, 11/27/2012 - 11:09 | 3014213 ArkansasAngie
ArkansasAngie's picture

But ... but ... it's all been done in the name of the greater good.

A better outcome would be had by simply letting moral hazard remove the status quo parasites. 

As it is ... death by a thousand cuts is going to hurt for a long time. 

Tue, 11/27/2012 - 12:11 | 3014362 Hugh_Jorgan
Hugh_Jorgan's picture

No matter how much hot air you put under the dead cat it is still... well, dead!

Tue, 11/27/2012 - 14:10 | 3014696 ejmoosa
ejmoosa's picture

It will want to bloat a bit before it's last burst....

Tue, 11/27/2012 - 15:22 | 3014988 e-recep
e-recep's picture

my question is : does the dead cat ever bounce twice?

Tue, 11/27/2012 - 18:43 | 3015660 imbrbing
imbrbing's picture

If you throw it down hard enough

Tue, 11/27/2012 - 10:29 | 3014069 Eireann go Brach
Eireann go Brach's picture

Depression my ass, in your eyes it probably is because you do not have a job or have a shitty job! Go check out the fucking malls, the sheep are spending all their money like drunken sailors!

Tue, 11/27/2012 - 10:32 | 3014085 LawsofPhysics
LawsofPhysics's picture

Riiiiiiiggggghhht.  I hope those SNAP cards keep working then.

Tue, 11/27/2012 - 10:34 | 3014093 Cognitive Dissonance
Cognitive Dissonance's picture

Mrs. Cog and I live on the outskirts of the DC area (the belly of the beast) and there seems to be no depression around here..........yet.

<Lots of brand new Mercedes, Lexus and Caddies on the road. Amazing what you can buy on a federal government/contractor salary.> 

Tue, 11/27/2012 - 10:36 | 3014105 Dr. Engali
Dr. Engali's picture

Their time is coming.

Tue, 11/27/2012 - 11:11 | 3014217 ArkansasAngie
ArkansasAngie's picture

My fingers' are crossed.

I'm not holding my breath however.

Tue, 11/27/2012 - 11:12 | 3014224 Dr. Richard Head
Dr. Richard Head's picture

I live in a eastern county of Cleveland and homes are being built, commercial buildings are going up and expanding.  M&A taking place at a fast pace.  The only thing I can tie that to is the fact that our Congressman, who abrubtly retired from our district AFTER the primaries, was a good little neo-con and was able to get plenty of loot for being a good boy.

Tue, 11/27/2012 - 11:26 | 3014252 adr
adr's picture

Like Eaton's new headquarters and the new hotels around it? Lots of new condos and hospital buildings. I like Developers Diversified's giant megaquarters that looks like nobody is ever there. Remember the Ahuja medical center was the first new hospital in Cuyahoga county, if you don't count the expansion of the Cleveland Clinic and University Hospital along with every hospital recieving $200 million upgrades over the last decade. Of course that area has one of the largest concentrations of Jews in the world.

Or you could be talking about Lake County where billions are being spent to support the illegal hispanic population that has turned the elementary school into a spanish only district. There are more section 8 welfare palaces going up outside Cleveland than almost anywhere else in the country. Development after development of what would be $200k townhomes in any white suburb.

Cleveland can show you everyting going on in the country and the economy. Doctors and lawyers getting rich, the poor getting record handouts, middle class whites losing everything trying to figure out how they wil feed their kids.

Tue, 11/27/2012 - 11:29 | 3014263 Dr. Richard Head
Dr. Richard Head's picture

Bingo on the Lake County.  HUGE hispanic population do keep the trailor parks running for sure, as well as growing section 8 in the heart of Painesville, OH.  Not enough porperty taxes to pay for those socialism prisons, I mean schools.  EVERY school running out of funds.  I think LaTourette's quick retirement was a prelude of the rats leaving the sinking ship.  So be it.

Tue, 11/27/2012 - 15:46 | 3015065 NotApplicable
NotApplicable's picture

Thing is, there'll never be a shortage of rats.

Tue, 11/27/2012 - 14:16 | 3014721 Cortez
Cortez's picture

Ahhh!  The Cleveland Clinic.  They pride themselves on "World Class Healthcare."  Too bad they aren't required to have full disclosure.  It should read "World Class Healthcare Billing."

As for the Hispanic effect on the area, I know long-time dry wallers that have exited the business because they use to get 25 per foot to hang new construction ten years ago.  Today the going rate is 13 per foot by hispanic labor. 

Tue, 11/27/2012 - 10:58 | 3014181 JPM Hater001
JPM Hater001's picture

I predicted long ago the original states will ceed back their property from DC.  There is no majic document that says DC remains after the invasion.

Tue, 11/27/2012 - 13:10 | 3014516 aztec two step
aztec two step's picture

seed or cede.....but not ceed

Tue, 11/27/2012 - 11:01 | 3014193 Its_the_economy...
Its_the_economy_stupid's picture

Wash dc is a BOOM TOWN! The skyuline is nothing but cranes putting up skyscrapers. DC is awash in CASH!

Tue, 11/27/2012 - 11:09 | 3014212 Cognitive Dissonance
Cognitive Dissonance's picture

Fairfax county is booming as well. The government teats are plentiful and producing nicely.

<Can you grow a few more please?>

Gvt teat

Tue, 11/27/2012 - 10:52 | 3014158 kridkrid
kridkrid's picture

They aren't spending their money any more than my children spend their money as I dole out tokens at chucky cheese. It's the same game on a much larger scale.

Tue, 11/27/2012 - 11:02 | 3014192 Cognitive Dissonance
Cognitive Dissonance's picture

That's Chuck E Cheese to you buster. :)

My children are of the age now where I send them tokens/checks to stay away.

Tue, 11/27/2012 - 11:21 | 3014240 Dr. Richard Head
Dr. Richard Head's picture

Mmmmmm.....the smell of pizza, piss, and sweaty socks.  All that, and a herd of sea-cow mothers surrounding their little turds.  I love that place.

Tue, 11/27/2012 - 11:28 | 3014257 edifice
edifice's picture

Thar she blows!!

Tue, 11/27/2012 - 11:30 | 3014266 adr
adr's picture

And it takes 500 tokens you paid $20 for to buy a $.25 pencil topper.

Kind of like how much the Fed has to print to gain .25% in GDP.

Wow, maybe Bernanke is actually Chuck E Cheese!!! God it would explain everything.

Tue, 11/27/2012 - 11:39 | 3014287 Cognitive Dissonance
Cognitive Dissonance's picture

"Wow, maybe Bernanke is actually Chuck E Cheese!!! God it would explain everything."

Too freaking funny. Paging WilliamBanzai7. Please report to your Photoshop app immediately.

Tue, 11/27/2012 - 12:27 | 3014413 csmith
csmith's picture

Only on ZH do you find this hilarious shit!!!

Tue, 11/27/2012 - 11:54 | 3014312 kridkrid
kridkrid's picture

That's why I said, " same game on a larger scale". It really is the same game. Money is printed for the kids. The kids run around feeling very "invested" in their activity. They get rewarded with trinkets built in China. The house always makes money. mercantilism.

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