December 1, 2014

Global economies not strong at the moment

The exclusive prosperity of the U.S. recovery will be felt in the months ahead.

This morning's economic data support the contentions reflected in my opening missive Wednesday. The figure for core durable-goods orders was disappointing: it came in at a drop of 1.3% for October, whereas expectations were for a gain of 1%.

September's number had also reflected a 1.3% slide, that time against estimates for a 0.7% rise.

Weakness in the October report was broad-based. Core shipments were also weak relative to expectations. Inventories grew -- by 0.6% -- and note that October's inventories-to-shipments ratio is now at 1.65, up from 1.59 a year earlier. Meanwhile, personal-income growth and spending were uninspiring. That is surprising to many. Finally, jobless claims rose above 300,000.

The bottom line is that this morning's data are unequivocally poor. A global economic slowdown will be exerting downward pressure on domestic activity and foreign-export demand.

On that point, Hewlett-Packard  (HPQ) CEO Meg Whitman's remarked on the pressures of a rising U.S. dollar in an interview with CNBC's David Faber this morning. Furthermore, the weakness in spending and income is disappointing in light of lower energy prices and improving job growth. As I've written, the exclusive prosperity of the U.S. recovery will be felt in the months ahead.