Durable Goods Take II: Original Report vs. Revisions

By: Mike Shedlock | Fri, May 27, 2016
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I received an Email from a long time "Minyanville" associate who writes under the pen name of "Mr. Practical".

He emailed an interesting set of charts on durable goods as originally reported by the Census Department vs. revised numbers from the Census Department.


Durable Goods Ex-Transportation New vs. Revised

Durable Goods Ex-Transportation New vs. Revised


Core Capital Goods New vs. Revised

Core Capital Goods New vs. Revised

The above charts courtesy of ZeroHedge US Government Quietly Cuts Historical Capex Data By Billions Of Dollars

Here's another pair of charts to consider.


Core Capital Goods Orders vs. Recessions

Core Capital Goods Orders vs. Recessions


Core Capital Goods Shipments vs. Recessions

Core Capital Goods Shipments vs. Recessions

We have not seen a plunge in core capital goods like this except in recessions or starting right before recessions.


Census Bureau Slide

What are Core Capital Goods?

Here's my comment from yesterday's post: Durable Goods Bounce Much Greater Than Expected Led by Autos; Core Capital Weakness: "Companies would rather use cheap financing to buy back shares at insane PE ratios than invest in production."

With that, let's return to an article I wrote on robots earlier this month.


Reader Asks "What Will Happen When Robots Take Our Jobs"

Flashback May 14, 2016: Reader Asks "What Will Happen When Robots Take Our Jobs".

Living Wages and Inflation

If you hand out a living wage for doing nothing, the amount it takes will escalate rapidly.

Central bank actions are the key problem. They are hell bent on inflation.

Technology is inherently deflationary. People benefit from falling prices, not rising prices.

Thanks to the increased productivity that stems from technology (which in turn stems from capitalism), people today live like kings compared to a few generations ago.

Not only that, but US citizens live twice as long as they did in 1850.

US Life Expectancy 1850-1911 White Males

US Life Expectancy 1850-1911 White Males

Notes
* Massachusetts only, white and nonwhite combined (1870 extrapolated by Mish)
** Original death registration states
*** Death registration states 1920
**** Preliminary
Source: InfoPlease

Forced minimum wage hikes and central banks actions fight overwhelming technological forces.

  • Hundreds of affordable housing programs did anything but make houses more affordable.
  • Student loan programs made debt slaves out of students while increasing the cost of education.
  • Things would cost a lot less and there would be a lot less debt were it nor for the Fed and governments.
  • Virtually everything government touches increases costs.

The "living wage" would be much, much lower if government and the Fed got out of the way!

Is Mish a Socialist?

Amusingly, and in reference to the Khan Academy's free education policy, a reader actually asked: Is Mish a Socialist?

The Khan Academy is an unbridled capitalist solution, not a socialist one! Khan gets money from donations, not government, not taxes, not union coercion.

"The Khan Academy is a 501(c)(3) not-for-profit organization, now with significant backing from the Bill & Melinda Gates Foundation, The Broad Foundation, Google, the O'Sullivan Foundation, Skoll Foundation, and other philanthropic organizations."

Everything government touches drives up costs. And the Fed comes along and wants to drive up costs further. It's no wonder that "living wages" keep rising.

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The problems we face are not the result of free market capitalism, nor the result of robots.

Rather the problems we face are the direct result of Fed sponsored inflation, corporate and military fascism, government interference in the free markets, and socialist-sponsored wealth redistribution schemes.

If we let things be, "unbridled" capitalism would take care of things, if not quite nicely, then certainly better than any socialistic or government-sponsored solution.


Mr. Practical Comments

I return to that article to post some comments from "Mr. Practical".

He writes ...

Markets should allow (have allowed) enough private wealth from production/technology to be (have been) created to allow people to afford an ever higher standard of living. Technology (robots etc) should drive (have driven) prices low enough for that to happen. That is the capitalistic process.

Government long ago interrupted that process. Instead of allowing prices to go down they have insisted they go up (the main reason is this allows profits/standard of living to be spread among the few and not the many) which has created huge imbalances and led to wealth concentrated in the few and the rest quickly heading to government subsistence.

Instead of spurring core capital investment, companies buy back shares at absurd valuations, consumers are stuck with rising prices (especially in places where government meddled the most like education and healthcare), and those on fixed income have been clobbered.

Technology should reduce prices but the Fed will not allow that. Nor will the "fair trade" advocates as I noted in Suspicion Sets In; Obama Sounds Like Trump; We're All Bernie Sanders Now!

Fed and government policies are so counterproductive it's amazing there is any growth, assuming you believe there really is any growth.

 


 

Mike Shedlock

Author: Mike Shedlock

Mike Shedlock / Mish
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Mike Shedlock

Michael "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Visit http://www.sitkapacific.com/ to learn more about wealth management for investors seeking strong performance with low volatility.

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