Economic Viewpoints

Businesses Continue Investing

Durable goods orders are a closely watched indicator of the economy’s health. It covers bigger-ticket items consumers buy – everything from toasters to cars – and capital goods businesses purchase – like tools and equipment.

Why it matters: Orders fell more than 6% in January, but diving into the data we see little reason for alarm.

Details: The decline was driven by a 60% drop in aircraft sales compared to December. Planes are expensive and their sales jump around from month to month, heavily influencing the data.

  • Taking out airplane sales, durable goods orders were down 0.3%.
  • More encouraging is that businesses continued investing. Capital goods orders, excluding planes, rose by 0.1%.

Looking ahead:  Changes in how much families and businesses spend on durable goods will give us insight into where the economy is headed.