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November Durable Goods Jump, Driven By Abnormal Seasonal Adjustments

Tyler Durden's picture


As we have pounded the table for the past 2 years, the one most fundamental component of a self-sustaining, "escape velocity" US recovery has been the persistent absence of corporate spending and capital expenditures, as a result of a corporate mindset in which it is better to reward shareholders with short-term gains such as dividends and stock buybacks, than invest in the future via CapEx (or M&A). Which is why we were eagerly looking forward to today's Durable Goods number as it provides the best read of how America's corporations are gearing up for capital spending in terms of both orders (which can be cancelled at any time as Boeing so vividly remembers in the aftermath of the Lehman bankruptcy) and actual shipments. On the surface, the numbers were great, beating expectations across the board.

The full breakdown:

  • Headline Durable Goods including volatile transports were up 3.5%, beating expectations of a 2.0% rise, and up from an upward revised -0.7%.
  • The much more relevant and informative Durable Goods ex transports rose 1.2%, beating expectations of a 0.7% increase, and up from a downward revised -0.7%
  • On the pure CapEx front, Cap Goods orders non-defense exluding aircraft rose 4.5%, slamming expectations of a 0.7% increase, and up from an upward revised 0.7%
  • And finally, Cap Goods shipments non-defense ex aircraft rose 2.8%, on expectations of a 1.0% increase and up from a downward revised -0.4%.

Still, even with the current pick up, the trend needs to show some additional strength to breach the recent declining trendline as shown in the charts below, first that of Durable Goods, helped recently quite a bit by Boeing orders:


And certainly more needs to happen in the Durables ex aircraft:


As for actual shipped Capex, it is still trailing at the bottom:

Nonetheless. today's news was great, and if one is so inclined, one may be convinced that the CapEx recovery is just around the corner.

However, because there always is a but, here is the BUT.

November traditionally is a month in which the bulk of the increase is due to seasonal adjustments. This was no exception, with Not Seasonally Adjusted data declining substantially in every category: Durable Goods, both core and ex-trans, declined by 2.3% and 6.4% respectively, while core CapEx, Shipments and Orders, also dropped by 2.0% and 1.0% respectively.

So what's the big deal: there are seasonal adjustments every year right. Of course, however the seasonal adjustments are there to revise the sequential changes, not the annual changes from a year ago. In other words, while the mover from October 2013 to November 2013 may be adjusted for seasonal variation, it is the move from November 2010 to November 2011 to November 2012 to November 2013 and so on, that should be virtually in line both adjusted and unadjusted.

Which is why it is odd that when we look at just this data for the Durable Goods ex transports, that we see avery curious Seasonal Adjustments aberation.

See if you can spot the difference in the chart below:

The chart above looks at the Year over Year change in Durables ex transports for the month of November across 4 different years. What immediately stands out is that while 2010 through 2012 acted just as expected, with SA and NSA data almost identical, in 2013 the data... diverged. In fact, the divergence between the SA and NSA was inexplicably over $2.2 billion. What does that mean? Well, if the SA number was accurate, and in line with what the NSA number predicted, Durables Goods ex-transports would have declined by -0.5% instead of rising by 1.2%. The same would apply to all other key categories from the report.

In other words, when all else fails, and when Unadjusted data points to a decline, just do what the government's Arima X-13 model is so good at doing, and adjusted the data.


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Tue, 12/24/2013 - 10:27 | Link to Comment PR Guy
PR Guy's picture



While we are waiting for normality to return, here's a funny animation of a conversation that actually took place between two women (and inspired the animation):


Tue, 12/24/2013 - 12:08 | Link to Comment Stuart
Stuart's picture

More and more reporting is now nothing but smoke & mirrors.   This is what we've become?  A public hostage to the lies and the whims of the 1/10th of 1%?   Fuck, are we stupid and blind!


Tue, 12/24/2013 - 12:28 | Link to Comment smlbizman
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'Anti-Propaganda' Ban Repealed, Freeing State Dept. To Direct Its Broadcasting Arm At American Citizens

Tue, 12/24/2013 - 10:29 | Link to Comment PR Guy
PR Guy's picture



And here's one on Death (and his hobby)


Tue, 12/24/2013 - 10:31 | Link to Comment papaswamp
papaswamp's picture

more bananas to keep the monkeys pumping!!!

Tue, 12/24/2013 - 10:31 | Link to Comment pragmatic hobo
pragmatic hobo's picture

$2B? are we haggling about $2B when the fed is pumping $70~$80B per month into the market?

Tue, 12/24/2013 - 10:35 | Link to Comment yogibear
yogibear's picture

LOL, the Christmas tree lot around here was packed with trees.  He wasn't selling anything so he decided to pack up and leave. Lot was packed with trees. A loss for him and his partner.

The local HH Greggs was empty. Ho, Ho, Ho, it should be of interest in how the government skews the numbers next month.

Tue, 12/24/2013 - 10:34 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"Full speed ahead and damn the real numbers." - Bureau of Lies and State Secrets

<Tell a lie enough times and it becomes a 'truth'.>

Tue, 12/24/2013 - 10:39 | Link to Comment Bearwagon
Bearwagon's picture

That's not exactly right. You forgot to mention that the lie has to be big enough! ;-)

Tue, 12/24/2013 - 11:30 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

While I tend to agree with your premise, the 'Big Lie" lays its foundation upon a series of much smaller 'accepted' lies. Belief must be suspended one small lie at a time in order for the Big Lie to be accepted as truth by default.

<Cus they would NEVER tell a Big Lie, only small baby ones.>

Tue, 12/24/2013 - 11:37 | Link to Comment Bearwagon
Bearwagon's picture

That is one way to do it. But as one of the greatmasters, namely Joseph Goebbels, told us: "The bigger and the more implausible the lie is - the sooner it will be believed."
For that technique to work it is necessary that the lie breaks a certain threshold. Example: The store just down your street cheats the finance office -> small, uninteresting lie. The finance office cheats each and everyone in your whole country -big enough lie to be interesting to the masses. I think you get my drift (and probably knew already, anyways). ;-)

Tue, 12/24/2013 - 11:58 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I get your drift. When I speak of small lies I am speaking of fundamental 'truths' we are only now beginning to understand are lies.

For example......we speak of our 'freedom', of freedom of choice. In reality the choices presented for our choosing are narrow in the same way a cattle chute is narrow. While we can choose between hundreds of cattle chutes, they pretty much all lead in the same direction..........wage and debt slavery.

Tue, 12/24/2013 - 12:05 | Link to Comment Bearwagon
Bearwagon's picture

Yes, I can agree with that. I learned it from Huxley and Horkheimer/Adorno, and I'll take it even further: The chute not only leads you to wage and debt slavery - it leads directly to Auschwitz-Birkenau.

Tue, 12/24/2013 - 10:43 | Link to Comment papaswamp
papaswamp's picture

What will be interesting will be a year or 2 from now when they go back and readjust the seasonal adjustment to correct the data, and everyone says oh shit...look that is when the re-depression started. But can't do anything at the moment to spook markets or consumers.... the banksters arent quite ready to move into their bunkers to ride out the coming disaster.

Tue, 12/24/2013 - 10:40 | Link to Comment Stoploss
Stoploss's picture

The Romans finally just started adding zero's towards the end...

Tue, 12/24/2013 - 10:41 | Link to Comment youngman
youngman's picture

Once they started adjusting the numbers...TPTB knew they could rule the world from then on....

Tue, 12/24/2013 - 10:45 | Link to Comment TheRideNeverEnds
TheRideNeverEnds's picture

Good news!  Just in time also, I think I saw a couple of my stocks downtick there for a second or two on the open.   Must have been a bad print, ya know, with the new paradigm and all that.



Tue, 12/24/2013 - 10:50 | Link to Comment Oldwood
Oldwood's picture

We spend all of this money for government employees to create these feel good reports and then everyone pisses all over them. What does it matter if its all fake. We are paying good money to be fooled. Its like paying top money to go to a magic show and then trashing the magician for his fakeries. Can't we all just get along and still believe in Santa? Drugs are too expensive and booze gives me a hangover, so let the show go on!

Tue, 12/24/2013 - 11:00 | Link to Comment Atomizer
Atomizer's picture

$9,169? Isn’t that moderately close to GM’s rebate and incentive figure to purchase a 2013 channel stuffing vehicle?


Tue, 12/24/2013 - 11:04 | Link to Comment ptoemmes
ptoemmes's picture

KInd of like this:

Merry Christmas - and don't lick any cold flag poles.

Tue, 12/24/2013 - 11:33 | Link to Comment itstippy
itstippy's picture

Help me out here please; what does the Durable Goods number represent?  I'm ignorant.

Is the Durable Goods number based on CAPEX spending by U.S. corporations, or is it based on orders for durable goods placed with U.S. corporations?

If a U.S. corporation places a large order for new robotic milling machines from Siemans (a German corp), does the order show up in Durable Goods?

If a Brazillian corporation places a large order for new earth movers from Caterpiller (a U.S. corp.), does the order show up in Durable Goods?

Tue, 12/24/2013 - 11:40 | Link to Comment Winston Churchill
Winston Churchill's picture


Its counted multiple times.

Believe your lying eyes not Govt. figures.

Tue, 12/24/2013 - 12:29 | Link to Comment Colonel Klink
Colonel Klink's picture

There are lies, damned lies....and then there are government statistics!

Enough said.

Do NOT follow this link or you will be banned from the site!