The "Real" Goods on the January Durable Goods Data

This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at Advisor Perspectives/VettaFi.

The Census Bureau has posted its Advance Report on the latest durable goods new orders for January. This series dates from 1992 and is not adjusted for either population growth or inflation. Let's review durable goods data with those two adjustments.

In the charts below the gray line shows the goods orders divided by the Census Bureau's monthly population data, giving us durable goods orders per capita. The blue line goes a step further and adjusts for inflation based on the PPI for all commodities, chained in today's dollar value. This gives us the "real" durable goods orders per capita and thus a more accurate historical context in which to evaluate the conventional reports on the nominal monthly data.

We've included a callout in the upper right corner to document the decline of the latest month from the all-time peak for the series.

Real per Capita

Economists frequently study this indicator excluding transportation or defense or both. Just how big are these two su-bcomponents? Here is a stacked area chart to illustrate the relative sizes over time based on the nominal data. We've also included a dotted line to show the relative size of the core capex subset, which we'll illustrate in more detail below.

Durable Goods Components

The next chart is similar to the first one except that it excludes the volatile transportation component, the series usually referred to as "core" durable goods.

Core per Capita