Here’s some positive economic news.
Orders for durable goods, items meant to last three years or more, rose strongly last month after an upwardly revised 1.3% gain in June, the Commerce Department said. Analysts were expecting durables orders to remain unchanged from the previous month.
Transportation orders rose 3.1% in July, largest gain since February, on a 28% rise in civilian aircraft orders. That followed a 21.3% drop in aircraft orders in June.
Even when volatile transportation orders were stripped out, demand for durables rose 0.7%. Analysts had expected a 0.5% drop in durables orders excluding transportation.
Non-defense capital goods orders excluding aircraft, seen as a barometer of business spending, jumped 2.6%, steepest gain since April. Analysts were expecting that category to decline by 0.1%.
Source: usatoday.com
Why these numbers are important is because this means that people think that the economy is going to pick up in the near future - why else buy something that is going to last a couple of years if you don’t think you’re going to be able to pay for it or make money off of it?
BigT
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Crap! This kind of screws me since I have a degree in economics but the truth is the truth and, quite frankly, I’ve known this for a long time.
My trust for markets has no bounds. When I have talked about who the candidates are going to pick as their running mates I always included the latest numbers from intrade.com, a predictions market. Why? Because things are too complex to be better understood by a cadre of trained experts (i.e. a small group of people who have all gone to the same colleges, read the same books, shop at the same stores, vacation in the same places, and in many other facets of their lives are just the same) than by everyone.
Sure, the distribution for the mob, us, may be bigger than the distribution for predictions by experts but, as is seen here and in other places, the average pick by the mob is better. We collectively know more than any appointed band of pointy heads can.
On average, the consumers predicted inflation rates that were off by 1.1 percentage points. The researchers compared the results with those found with the Livingston Survey of professional economists, finding a similar error in predictions.
For instance, from 1993 through 2005, U.S. consumers as a whole were off by an average of 0.72 percentage points in forecasting the inflation rate. Over that same period, economists erred by about 0.82 percentage points.
Source: livescience.com
BigT
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After worries that growing tensions between Russia and the US over Georgia could degenerate into a war led to higher prices this week there has been a big reversal, a fall in the price of oil of 5.4%. Conversely, the dollar is up.
Crude oil prices fell more than 5.4 percent on Friday in the biggest one-day slide since 2004 as dealers turned their focus to rising supply levels and weakening global demand.
A rebound in the U.S. dollar encouraged the sell-off, applying downward pressure across the commodities markets by weakening the purchasing power of buyers using other currencies, dealers said.
What caused this dropoff?
The declines Friday were encouraged by two reports — one showing an uptick in OPEC crude oil output and another showing an expected decline in U.S. travel over the September 1 Labor Day holiday weekend as high fuel prices hit consumers.
More supplie coupled with less demand means prices will go down. That’s just economics 101 right there. And the threat of war must be perceived as not so great anymore because a war between the US and Russia would be a disaster for the world’s economy.
BigT
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