Durable Goods Up & Unemployment Claims drops!!

May 28 (Bloomberg) -- Orders for U.S. durable goods in April jumped more than forecast as a rebound in auto demand and surge in defense spending overshadowed declines in business equipment that signal investment will be one of the last areas of the economy to recover.

The 1.9 percent increase reported by the Commerce Department today in Washington was the largest since December 2007, and followed a revised 2.1 percent drop in March that was more than twice as large as previously estimated. Excluding transportation, orders climbed 0.8 percent.

Companies, which have record levels of spare capacity, will continue to cut back on buying capital equipment such as computers until sales show sustained gains. The worst credit crisis since the Great Depression has prompted economists to scale back forecasts for economic growth in the second half of the year.

“It’s hard to identify what the source for a big, lasting turnaround would be,” Tim Quinlan, an economist at Wachovia Corp. in Charlotte, North Carolina, said before the report. “I haven’t seen anything that would suggest to me yet that businesses are ready to roll up their sleeves and start spending money.”

Economists forecast orders would rise 0.5 percent, according to the median of 73 estimates in a Bloomberg News survey, after a previously reported 0.8 percent decline in March. Projections ranged from a drop of 2.4 percent to a gain of 3.8 percent.

Ex-Transportation

Excluding transportation equipment, orders were forecast to fall 0.3 percent after a 0.7 percent decrease the prior month, according to the Bloomberg survey. Projections ranged from a drop of 3.3 percent to an increase of 1 percent.

A separate Labor Department report today showed fewer Americans filed claims for unemployment benefits last week, a sign the biggest rounds of firings may be over. Initial jobless claims fell by 13,000 to 623,000 in the week ended May 23, from a revised 636,000 the prior week, the report showed.

Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, dropped 1.5 percent after a 1.4 percent decrease the prior month. Commerce previously estimated such orders in March had risen 0.4 percent.

Shipments of those items, used in calculating gross domestic product, slumped 2.1 percent, the sixth decrease in the last seven months. The decline may prompt some economists to lower their forecasts for economic growth this quarter.

Third-Quarter Outlook

Some private economists have tempered their projections for the pace of recovery. Economists surveyed by the National Association of Business Economics forecast the economy will grow at a 0.7 percent pace in the third quarter and 1.8 percent the final three months, compared with 1 percent and 2.1 percent gains projected in February, according to figures released yesterday.

Orders excluding defense equipment increased 1 percent and bookings for military gear jumped 23 percent.

Orders for transportation equipment climbed 5.4 percent, led by automakers. Demand for commercial aircraft, often a volatile category, decreased 6.8 percent, running counter to industry figures.

Boeing Co., the world’s second biggest airplane maker, said May 13 it received 17 aircraft orders in April, up from 6 placed the month earlier. Deliveries for the month totaled 39 aircraft, down from the 50 shipped in March.

Boeing Cuts

Even so, Boeing is cutting 10,000 jobs, reducing production of the 777 wide-body plane in 2010 and postponing plans to increase output of the 747 jumbo-jet and 767 models because the recession has curbed demand and dried up airlines’ financing options. Chief Financial Officer James Bell said May 21 that the company’s finance arm could access the debt market for about $800 million this year to help customers fund plane purchases and stem order cancellations, which have paralleled sales.

Automakers also continue to struggle. Chrysler LLC this month idled its 22 U.S. plants after filing for bankruptcy. General Motors Corp. also has cut output as a bankruptcy deadline looms.

Orders for computers decreased 6.4 percent following a 4.7 percent drop in March, today’s report showed.

Federal Reserve policy makers, in a statement following their April meeting, cited improved financial conditions, stronger business and household sentiment, and expectations of an increase in industrial production to replace inventories, as reasons why the pace of economic contraction will probably ease.

LSI Corp. Chief Executive Officer Abhi Talwalkar said calling the bottom now would be “too bold of a statement,” even as sales in the chip industry were improving.

Still, “I do believe we won’t experience another freefall like we did in the last quarter and a half,” Talwalkar said in a May 18 interview. Milpitas, California-based LSI makes computer hard drives, servers and networking systems.

www.calculatedriskblog.com

Unemployment Claims: Continued Claims at Record 6.79 Million
by CalculatedRisk on 5/28/2009 08:30:00 AM
Another week, another record for continued claims.

The DOL reports on weekly unemployment insurance claims:

In the week ending May 23, the advance figure for seasonally adjusted initial claims was 623,000, a decrease of 13,000 from the previous week's revised figure of 636,000. The 4-week moving average was 626,750, a decrease of 3,000 from the previous week's revised average of 629,750.
...
The advance number for seasonally adjusted insured unemployment during the week ending May 16 was 6,788,000, an increase of 110,000 from the preceding week's revised level of 6,678,000.
Click on graph for larger image in new window.

This graph shows weekly claims and continued claims since 1971.

Continued claims are now at 6.79 million - an all time record. This is 5.1% of covered employment.

Note: continued claims peaked at 5.4% of covered employment in 1982 and 7.0% in 1975. So this isn't a record as a percent of covered employment.

The four-week average decreased this week by 3,000, and is now 32,000 below the peak of 7 weeks ago. There is a reasonable chance that claims have peaked for this cycle, but it is still too early to be sure, and if so, continued claims should peak soon.

The level of initial claims (over 623 thousand) is still very high, indicating significant weakness in the job market.

oh no please dont report any good news like the fact that unemployment rates DROPPED in 21 states....

I'm starting to think ericho = steveF.

Nice to see petrzitz is back!

ericho - this is a real estate board, not bloomberg news or some stock message board. i'll be the first to admit that broad economic data can have some impact on ny economy, real estate, etc. but can we keep the posts to those factors that are more closely tied to nyc real estate rather than every little piece of economic data that may or may not affect the markets, much less nyc real estate?

no, stevejhx, steveF has a sunnier, simpler style. posts and doesn't do much with it. steveF owns investment properties, ericho just made the piss-poor decision to buy home in LIC.

"ericho just made the piss-poor decision to buy home in LIC. "
In what way is it piss-poor?

Who are you to judge me that it's a piss-poor decision? Find me a new development with water front view and 1,500 square feet of space for mid 500s in Manhattan...
That comment shows your true color. I have not insulted you in anyway but you would come at me like that?
How dare you! WHO THE HELL YOU THINK YOU ARE!!!

AR,
I'm going to find you...oh i will...i will...
After i find you, i'm going to feed you super size double whoppers and french fries until your anal start leaking trans fat oil...

"I'm starting to think ericho = steveF."

I seriously considered this possibility as well, but I agree with AR, the behavior/post patters simply do not match.

"I'm going to find you...oh i will...i will...
After i find you, i'm going to feed you super size double whoppers and french fries until your anal start leaking trans fat oil..."

this is just inappropriate man, not to mention disturbing. stevejhx and AR, i can't believe i'm going to say this, but i'm starting to miss stevef!

todays tiny green shoots are causing the market to sell off. not a good sign.

ericho75, two things. 1: If you really bought in a new development for less than 400psf, then you didn't buy recently at the crazy prices most people speak of when saying LIC is a piss poor decision. and 2: Please do not threaten someone on these boards. You may see name-calling, but how often have you seen threats?

SteveF is my cousin okay!
I love that guy...BRING HIM BACK!!!

btw, kidding aside i don't what you say about my purchase in LIC. The thought of purchasing a home as an investment is what got us in this mess. My wife and i didn't buy this place as an investment in a matter of fact, it's probably far from it. We just wanted a place big enough for our kids to run around in and also close enough where we don't have to spend 1-2 hours on commute. My current commute time is 15-20 minutes....door to door; you can't really top that anywhere.

well, i have him on ignore, but my sense that there was something disturbing and disturbed about the lad was obviously quite right. to think he went off on such a little comment. that's some trigger.

i have never put anyone on ignore before, not even malraux or spunky. how prescient of me. i'd have to take him off ignore to mark it as abuse. be a good sport, special_k, and do it for me.

steveF is harmless. just an optimist.

xellam,
Nope, not 400s..mid 500s.
I'm just having a little fun. AR sound like a nice little miss Daisy, no way would i threaten to feed her double whoppers until she start to....

AR,
Why would you call my decision piss-poor? What are you basing it on?

ericho most of us feel the RE market has much further to fall based on the macroeconomic picture and what history tells us about past bubbles bursting. personally i think 500 sq ft is going to look mighty expensive one year from now. furthermore, like it or not, your condo is an investment. something you hope to pass down to your kids. it is delusional to think of it as simply a place to live.

cfranch,
But the current macroeconomic picture have shown stabilty, even Roubini acknowledges this and 90% of all economist also (these are facts). Since no one knows the future, the current price of 500s is better than last year's prices of 700-900s.
If i don't buy, i'll be renting...the cost of renting a 1,500 square feet unit in LIC is about 4,000 - 4,500. In 1 year that's over 40K and in 2 years, that's 80-90K. Total carry cost on a monthly basis after tax deductions will be lower than rent. Why wait?

Q1 mortgage delinquincies are at a record 12%, continuing unemployment claims hit a record high for the 17th week in a row.

But people are buying more refrigerators and cars, so all is well.

interesting what a couple of hours will do. bloomberg's durable goods orders headline now reads:

U.S. Durable-Goods Orders Hover Near 13-Year Low (Update2)

bloomberg's spin is always interesting to watch.

Special_K has a good point. Starting a new thread to declare the end of the world or the arrival of a massive rebound every time (a.k.a., daily) macroeconomic indicator X is down 2% or up 1%, respectively, is silly and clutters up the board. This is not failing to see the forest for the trees; it's more like not seeing the branches for the leaves. There is a long thread for posting economic data updates. The selective and usually trivial data that ericho75 has been posting may not even be relevant enough to have a place on that thread, but at least there they would fit into some context of other data.

That said, the better way to deal with this kind of spam is to ignore it, at which point trivial posts with zero replies just migrate down the message board.

Has anyone ever considered that ericho75 and SteveF might be toying with the bears, posting random upbeat economic news to see how quickly the attacks and lectures come and from how many of the predictable players? Maybe they have side bets on the reactions. %u201C10 bucks says that I can get 20 outraged denials faster than you can!%u201D "20 bucks says that aboutready takes the bait" - that sort of thing.

sidelinesitter, i did myself a favor and put him on ignore. i'm back over on the economic links thread, which i started for links that generally actually provide some analysis, not just numbers. please don't encourage migration to that thread, it's a decent one and doesn't need the meaningless drivel redirected there. the only impetus for my reaction is a contempt for those who care nothing about the people affected by the numbers, who only care for the market and their own asset accumulation. but you're right, it is a meaningless endeavor to be rowing upstream for no possible gain, and much irritation.

how about a this is today's numbers in a vacuum thread?

ericho
i think the current economic picture is muddled at best. as for you particular purchase, yes it seems to make fiscal sense, now. but if the value of your unit falls another 20-30% plus maintenance and taxes rise your asset will be a drag on your portfolio. and it will hardly be mitigated by your tax savings.

The potential rise of maintenance and taxes are a completely different debate. It can happen to any units in NYC. Can we both agree that the rate of deterioration on the economy is slowing? If that's the case, can we say that the health of the economy have a direct effect on housing prices? Just like how no one predicted this surge in commodities and the current stock market, i'm this bear market in housing will baffle many.
There isn't a lot of units (1,500 square) feet in the area in the LIC area that meets my family needs. I can wait for that 20-30%, but at what price? 1-2 years of rent, settle for a unit that is smaller or potentially pay higher prices? If someone can gurantee me 20-30% lower for the exact same unit by next year, i'll walk out of my contract. Any takers?

"Can we both agree that the rate of deterioration on the economy is slowing?"

Not sure how this can be long term. Even the housing crises looks far from over: http://news.yahoo.com/s/ap/20090528/ap_on_bi_ge/us_foreclosures

All this "recovery" could easily be a short uptick in a very bearish environment. Guess we'll know late next Fall.

"All this "recovery" could easily be a short uptick in a very bearish environment."

Yes, but never the less it's an 'uptick'. I'm glad someone finally acknowledges it. No one know what the future holds, but we do know what's happening today.

"Not sure how this can be long term." Huh?

akallabeth - I know it's fashionable on SE to be reflexively bearish, but you might try thinking a bit before posting. The safest prediction of all is that the rate of deterioration will slow in the long term. How can you be unsure about this? For example, GDP declined at over 6% annual rates in each of the fourth quarter and first quarter. Just as background, those are really, really big numbers. To say that the rate of deterioration can't slow in the long term is to say that the outlook is for sustained declines greater than 6+% going forward. I wouldn't even know where to start in responding to a view that crazy.

ok, said i'd exit this, but sidelinesitter did you see the one i posted on Martin Feldstein's opinion that any recovery may be reversed? just sayin'.

ericho-how you can simply discount a rise in maintenance and taxes? your condo does not exist in a vacuum and market forces will have an effect on its value. also markets tend not to fall in a straight line but plateau and fall again or form lower highs and lower lows on the way down-think a declining sine wave. same thing happens on the way up. just pull up any stock chart.

i day trade for a living. few people succeed at it simply because their emotions get in the way. same with real estate. you own so any piece of good news is inflated and any bad news is shouted down or ignored.

didn't see it. to make this easy, let's just say that I agree sight unseen. i don't dispute the possibility (likelihood) of a reversal, maybe multiple reversals, as the economy stumbles around bumping into all sorts of bad things in the dark and the government continues to make up responses as they go along, including some cures that in the long term will be worse than the disease. All that is still a long way from a forecast of long-term and accelerating declines from where we are today. just sayin'

Taxes and maintenance affects both the owner or renter, because the owners will pass on the increase to their tenants by increasing rent. If it affects both party (renting and owning), how can you add that as part of the equation?

actually in a weak rental market owners cannot pass these increases on. i rent in a new condo that threw in free parking, storage and gym and was able to negotiate a 15% reduction of asking rent and one month free. i do not expect they will be able to raise my rent next year.

But did maintenance and taxes go up this year for your building? What he's marking down is the value of his property to market rate, but this can't go on forever. Using the past 20 years, owners have past increases in maintenance and taxes to their renters.

this is a brand new building. only 20 or so units occupied mostly by renters.

ericho - for some reason, LIC is a hot point on these boards. There are certain posters who get awfully bothered that LIC is becoming more developed and more and more popular, so they disparage it and hope it collapses for some weird reason. I think LIC is great. Every day I get to see beautiful views, to enjoy great waterfront parks and piers, to enjoy lots of good restaurants, to meet lots of interesting people, and I have an incredibly easy commute to midtown. Good luck with your new place.