What the Media Missed About the "Fall" in Today's Durable Goods Data

Source: Mixabest

There's a lot of misinformation out there. Case in point, media reporting on today's U.S. Durable Goods data for May. Consider these headlines:

• MarketWatch: Durable-goods orders backslide again
• Wall Street Journal: U.S. Durable Goods Orders Fall 1.1% in May
• Fox News: U.S. Durable goods orders fell in May by the most in 18 months

A proper analysis of today's data, however, revealed exactly the opposite of today's reporting. Durable Goods ex-Defense & Aircraft (i.e. a good proxy for household demand) hit a 33-month high on a year-over-year basis.

Below is a detailed breakdown of the data from Hedgeye U.S. Macro analyst Christian Drake:

Don’t get too caught up in the headline numbers: Headline Durable Goods:  -1.1% sequentially while accelerating to +2.7% year-over-year with 2-year comp accelerating for a 3rd month. Ex-Defense & Aircraft (household demand proxy): flat sequentially with year-over-year growth accelerating to a 33-month high at +5.3% year-over-year. Capital Spending... Core Capital Goods: -0.2% sequentially but year-over-year accelerates to +5.0% (also best in 33-months) with 2-year trend continuing to improve. In short, soft sequentials but definitely some misleading optics on the headline as year-over-year growth accelerates. Ex-Defense & Aircraft & Capital Goods Orders are near 3-year highs and comps remain favorable for June.

Below is a chart showing the 33-month high in Durable Goods ex-Defense & Aircraft. In other words, the mainstream media's "analysis" is misleading.

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