Today's Census Bureau report on durable goods orders was like a poorly made cake with delicious frosting: tasty at first, but awful when fully experienced.
The frosting in today's report was that overall orders increased in March by a seasonally adjusted 4.0 percent. The trouble is that an important, widely recognized element of that report — what the Associated Press's Martin Crutsinger vaguely described as "a key category that serves as a proxy for future business investment" — came in with yet another minus sign. That category's 0.5 percent decline, though noted, had far more significance than Crutsinger gave it.
The category, technically known as "non-defense capital goods new orders, ex-aircraft," fell by 0.5 percent in March, after declining by a downwardly revised 2.2 percent in February.
Crutsinger even noted that this metric has been in long-term free fall:
More worrying was a 0.5 percent drop in demand in a key category that serves as a proxy for future business investment. The retreat followed a 2.2 percent drop in February and marked the seven straight monthly decline.
"The report was yet another false positive that looks good in the headline but is eroding away underneath," said Michael Montgomery, U.S. economist with IHS Global Insight.
How bad is that erosion? Very bad, and Crutsinger, a veteran AP scribe with over 30 years of experience, should have recognized it — or perhaps he did, and deliberately failed to report it.
As Zero Hedge noted: "These numbers have never fallen for this long a period without a recession."
Those who believe I'm being unfair to the AP reporter for not catching this historical recession indicator need to take a trip wth me down Memory Lane back to 1985.
On December 16 of that year, an AP dispatch authored by Crutsinger almost gleefully jumped on a survey of a group of economists predicting that there would almost certainly be a recession in — I'm not kidding — mid- to late-1987 (the full article, presented for future reference, fair use and discussion purposes, is here):
Keep in mind that these economists made the prediction which drove Crutsinger's writeup at the end of a third year of stellar growth under Ronald Reagan's tax cut-driven economic policies. These results constantly confounded and frustrated the Keynesians who worship at the altar of "stimulus" noted at the end of the excerpt above.
After three years, you would think that Crutsinger would have been at least a little skeptical that the herd was so sure that a recession was looming almost two full years down the road. Hardly. Readers who go to the full writeup will note that in his final paragraph, the AP reporter wrote about not if, but "when the next recession will begin."
For the record, there wasn't anything resembling a recession in 1987, or 1988, or 1989. Instead, annual economic growth continued along at a pace well above the 3 percent figure AP's reporters now like to call "robust":
Also for the record, annual growth since the last recession officially ended in June 2009 has never been higher than 2.5 percent, and has averaged only 2.2 percent; the 1983-1989 average, as seen above, was 4.4 percent. It seems that the Keynesian "stimulus," consisting of trillions in deficits, even larger increases in the national debt, and even more trillions in Federal Reserve "quantitative easing" (i.e., creating "money" out of thin air) has succeeded in "stimulating" only two things: economic mediocrity and growing national financial peril.
So yes, I think it's more than fair to get on Marty Crutsinger's case for failing to recognize what Zero Hedge caught about today's durable goods report. He was at the ready, based only on a survey, to help predict a supposedly near-certain recession that never happened 30 years ago during a Republlican administration. During the Bush 43 administration, he was among several AP reporters who obsessed about a recession being just around the corner in 2004 — and 2005, and 2006, and well into 2007, even though during almost all of that time period, the economy grew decently if not necessarily robustly.
Thus, he has no defense or excuse — unless he's willing to admit for the record that AP really does stand for the Administration's Press — for failing to report the existence of a serious recessionary red flag sitting right there in the hard data today.
Cross-posted at BizzyBlog.com.
