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Post by jeffolie on Sept 26, 2007 10:45:17 GMT -6
Durable goods orders plummet By MARTIN CRUTSINGER, AP Economics Writer WASHINGTON - Demand for big-ticket manufactured goods plunged in August by the largest amount in seven months, with widespread weakness signaling a slowdown in the nation's industrial sector. The Commerce Department reported Wednesday that orders for durable goods, everything from commercial jetliners to home appliances, fell by 4.9 percent in August, the biggest decline since a 6.1 percent fall in January. It was far larger than the 3.5 percent drop that economists had been expecting and resulted from across-the-board decreases in a number of categories. The concern is that the steep downturn in housing and turbulence in financial markets could start to affect the economy more broadly, raising the risks of a full-blown recession. news.yahoo.com/s/ap/20070926/ap_on_bi_go_ec_fi/economy;_ylt=AibEdIlt0OKrxAJYUaEcbz6s0NUE
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Post by unlawflcombatnt on Sept 26, 2007 13:49:05 GMT -6
The -4.9% decline was even worse than the -4.5% predicted. The Durable Orders (less Transportation) was also worse than predicted the predicted -1.3%, coming in at -1.8%.
Unfortunately for us truth-seekers, the BEA always adjusts the value of Durable Goods upward, when adjusting for inflation. This is in contrast to every other item measured in GDP. Thus the -4.9% change will come out to only -4.7%, or -4.5%, or even less--thanks to the alternate reality concoction called "hedonics."
The BEA (Bureau of Economic Augmentations) assumes deflation has occurred in the price of computers. In other words, they assign a "real" price to a new computer that is higher than the purchase price. Thus, 1 computer sold for $600 will add more than $600 to the inflation-adjusted value of GDP. As a result, a computer with a market value of only $600 may add $700 to the real GDP. Or $800. Or $900. Or more. It just depends on how much distortion they think the public will believe.
It's too bad a consumer can't re-sell that $600 computer-- and receive $700, $800, or $900 for it. And then use that "profit" to pay for something trivial-- like food or rent.
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