Everything is transitory. Your life is transitory. The universe is transitory.
A couple weeks ago this chart was sent to me as an example that things were picking up at a dandy clip:
Oddly enough, a woman named Jill Mislinski at Advisor Perspectives had taken that same data series as her topic on July 28:
The "Real" Goods on the June Durable Goods Data
The Census Bureau has posted the Advance Report on the latest Durable Goods New Orders for June. This series dates from 1992 and is not adjusted for either population growth or inflation.
Let's now review Durable Goods data with two adjustments. In the charts below the gray line shows the goods orders divided by the Census Bureau's monthly population data, giving us durable goods orders per capita. The blue line goes a step further and adjusts for inflation based on the Producer Price Index for All Commodities, chained in today's dollar value. This gives us the "real" durable goods orders per capita and thus a more accurate historical context in which to evaluate the conventional reports on the nominal monthly data.
We've included a callout in the upper right corner to document the decline of the latest month from the all-time peak for the series.....
Through a series of charts she adjusts for the growth in population and then for inflation to get the 'real per capita':
....Here is the real per-capita Core Capex smoothed with its six-month moving average for a better sense of the trend. This metric has essentially gone nowhere over the past six years.
The Long-Term Trend
As these charts illustrate, when we study durable goods orders in the larger context of population growth and also adjust for inflation, the data becomes a coincident macro-indicator of a major shift in demand within the U.S. economy. It correlates with a decline in real household incomes, as illustrated in our analysis of the most recent Census Bureau household income data....
...MUCH MORE
Failure to understand this stuff has two problematic effects:
a) without the adjustments one gets a very distorted view of what is actually going on.
b) this distorted view allows assorted knaves, fools, charlatans and varlets to spin a narrative that is no more than light fiction.
And that's without commenting on the fact that both axes in the top chart are truncated, a chart crime, unless actively pointed out.
