Durable goods are products that should last more than 3 years. That usually includes things like appliances, furnishings, and heavy equipment. The Commerce Department tracks this data and the number of orders for these things popped up an extra 4.9% in July, which was a nice surprise.

Why do I care whether North Americans are buying a new fridge? This is actually a metric you should watch for insight into potential corporate profits. If durable goods (which tend to cost a lot) are being purchased at an increasing rate, it bodes well for the companies that produce and sell those products.

The much-maligned federal government's "cash-for-clunkers" program, is, nevertheless, stimulating the U.S. economy.

True, it may take new cars sales that would normally occur in 2010 and bring them forward to 2009, but that fact, combined with the extra customer traffic the program has created in the nation's auto showrooms, has bumped up auto sales -- providing a slight tailwind for the U.S. economy.

Today was a strange day. Durable goods gave little hope and housing data was also lackluster. Yet when you beat lowered estimates that is often enough. The government's "stress tests" look more like a baseline test for the banks.

Had the DJIA closed a penny above the 8,131.33 level, that would have marked a 7-week rally. Here were today's unofficial closing bell levels:

Dow 8,075.09 +118.03 (1.48%)
S&P 500 866.06 +14.14 (1.66%)
Nasdaq 1,694.29 +42.08 (2.55%)

Top Analyst Calls

Today's data on the horrible jobless and durable goods data was a blow, but the markets ended up sweeping it under the table. For a bit. Then the Obama budget went to Congress with all the entitlement spending packages and tax increases.

Whether or not these make into law and policy is one thing, but the investment community is beginning to wonder now whether the new rules will make it worthwhile to even invest. That is a sad thought and probably an unfair notion in the end, but this is what traders and investors have said. Here are today's unofficial closing bell levels:

Dow 7,182.08 -88.81 (-1.22%)
S&P 500 752.82 -12.08 (-1.58%)
Nasdaq 1,391.47 -33.96 (-2.38%)

Top Analyst Calls

U.S. durable goods orders increased 0.8% in September, boosted by strong demand for airplanes, the U.S. Commerce Department announced Wednesday.

Economists surveyed by Bloomberg News had expected September durable goods orders to fall 1.1%. Still, durable goods orders decreased a revised 5.5% in August, which was worse than the 4.5% decline announced earlier.

Transportation goods orders skewed the data higher, increasing 6.3% in the month. Excluding transportation, durable good orders declined 1.1% in September. Further, durable goods have now declined 1.8% on a year-over-year basis. However, durable goods orders have increased in four the past five months.

Economist David H. Wang told BloggingStocks Wednesday the durable goods report offered additional evidence of slowing economic activity, but it could have been worse.

"I expected to see an even bigger drop in manufactured goods demand, but do not misunderstand, outside of airplane demand, this is a weak report," Wang said. "With tighter credit for businesses and for consumers with auto purchases and other goods, we're going to continue to see further deterioration in durable good orders in the fall, before a recovery starts early next year."

As Washington tries to come up with an agreement on how to solve the current economic crisis, we received more information today on just how bad things are getting, as figures show new home sales were very weak during the month of August.

As the credit crunch and falling home values continue to apply pressure to an already weak housing market, the Commerce Department announced today that new home sales in August fell by a sharp 11.5% in August, resulting in a seasonally adjusted sales rate of 460,000 new homes. To find the last time we saw a rate this low, we would have to look all the way back to January of 1991.

As always, Wall Street likes to compare actual numbers to estimates. Had economists been expecting to see a 10% or greater drop in new home sales, that would be one thing, but that was not the case. Going into today's report, economists were expecting to see new home sales fall, though not nearly the 11.5% actual rate, but a much smaller drop of only 1% in the month. So today's reported sales figures are definitely going to add to the confusion that many are feeling regarding the housing market.

U.S. factory orders increased a surprising 1.4% in March 2008, the U.S. Commerce Department announced Friday, on rising international demand for U.S. goods. It was the fastest growth for factory orders since December 2007.

Economists surveyed by Bloomberg News had expected March 2008 factory orders to increase by 0.3%. Factory orders fell a revised 0.9% in February 2008, slightly better than the previously announced decline of 1.3%.

Also factory orders, excluding the volatile transportation equipment component, increased 2.2% in March 2008.

Economists follow the factory orders statistic because it provides one of the most comprehensive surveys of advance orders for durable goods -- how busy factories are likely to be in the period ahead. Factory orders also are a major value-added component of the U.S. economy.

Orders for durable goods increased 0.1% in March 2008, revised up from the 0.3% decline estimated a week ago. Orders for nondurable goods rose 2.6%, unfilled orders increased 1.1%, shipments climbed 1.1%, and inventories for manufactured goods rose 1.1%.

U.S. economy's saving grace: exports

Economist Peter Dawson told BloggingStocks Friday the economy "is making a concerted effort to complicate economists lives" by recording stronger-than-expected economic data, of late.

U.S. factory orders fell for the first time in five months in January 2008, as the slowing U.S. economy compelled businesses to reduce spending, the U.S. Commerce Department announced Wednesday.

Factory orders fell 2.5% in January 2008, after a revised 2% increase in December 2007. Analysts surveyed by Bloomberg News had expected factory orders to decrease 2.6% in January 2008.

Excluding orders for transportation equipment, factory orders declined 0.4%.

Durable goods orders fell a revised 5.1%, compared with the prior estimate of a 5.3% decline. Core capital equipment orders fell 1.5%. Orders for non-durable goods rose 0.3%.

Inventories of manufactured durable goods increased 0.6%, and have risen in six of the last seven months. Unfilled orders for manufactured durable goods increased a revised 0.7%, and have increased in 32 of the last 33 months. Shipments increased 2%, following two consecutive monthly decreases.

Durable good orders fell a larger-than-expected 5.3% in January 2008 as the slowing U.S. economy led businesses to cut back on purchases, the U.S. Commerce Department announced Wednesday. Economists had expected durable goods orders to fall 3.9% in January 2008.

Further, the December 2007 durable goods statistic was revised lower to 4.4% from the earlier 5%, the department announced.

Almost every durable goods category declined in January 2008, a sign that businesses are becoming more reluctant to take on goods amid a U.S. economic slowdown.

Excluding transportation, durable goods orders declined 1.6%, the third decline in four months.

Bookings for non-defense capital goods excluding aircraft dropped 1.4%, the most since October; defense equipment declined 4.7%, military gear plunged 20%, transportation equipment decreased 13%, and automobiles declined 0.8%.

U.S. factory orders increased in December 2007 -- a sign that business spending remains resilient even as employers pull-back regarding hiring plans.

Factory orders increased 2.3% in December 2007, in-line with the 2.3% consensus estimate, the U.S. Commerce Department announced Monday, in a statement. Factory orders rose a revised 1.7% in November 2007. Excluding transportation orders, factory orders increased 0.7% in December 2007.

Durable goods orders drove factory orders -- increasing 5% in the month. Orders for nondurable goods fell 0.4%; machinery increased 7.3%, and electronics rose 4.1%

Durable goods orders jumped 5.2% in December 2007, well above the 1.6% estimate, the U.S. Commerce Department announced Tuesday, flying in the face of predictions of the recession's onset. It was the largest gain in orders since July 2007.

The index increased a revised 0.5% in November 2007. Excluding transportation goods, the index increased 2.6% for the month.

The department said the nation registered higher demand for airplanes, communications equipment, and defense capital goods in December 2007,

Non-defense capital goods

Bookings for non-defense capital goods excluding aircraft increased 4.4%, the most since March 2007. Shipments climbed 2%, the most since March 2006.

Economist Steve Affinito told BloggingStocks Tuesday the December 2007 report was surprisingly bullish.

"The non-defense capital goods increase of 4.4% was impressive, because that's an indicator of future business investment," Affinito said. "It looks like business investment is faring better than we had anticipated, despite weakness in other areas of the economy, such as housing."

However, Affinito cautioned that this was a December 2007 report, and that "signs of the slowdown's bite undoubtedly will appear in future durable goods orders reports for the initial months of 2008."

Retail sales declined 0.4% in December 2007 -- worse than expected -- as sales of most durable goods fell, the U.S. Commerce Department announced Tuesday in a report that raised concerns that the U.S economy has entered a recession.

Economists had expected December 2007 retail sales to decline 0.1%. Further, retail sales rose 4.2% in 2007, the smallest increase in five years.

Excluding autos, retail sales fell 0.4% in December, and declined 0.2% while excluding both autos and gasoline sales, the Commerce Department said.

Recession evidence piling up

Economist David H. Wang told BloggingStocks on Tuesday that the evidence indicating that the U.S. economy has fallen into a recession is mounting.

Consumers spent more than they earned in November 2007, returning to near-decade long characteristic that has been responsible for driving a considerable portion of U.S. economic growth, the U.S Commerce Department reported Friday. Meanwhile, nominal income rose just 0.4% in November 2007, below the 0.5% estimate, the department announced. Nominal income gained 0.2% in October 2007.

Consumer spending rose 1.1% in November 2007, above the 0.9% estimate. Spending on durable goods -- such as autos, furniture and appliances -- increased 0.6%, after a 0.1% decline in October 2007. Non-durable goods spending also rose 0.6%, and services spending gained 0.5%.

Industrial Production fell 0.5% in October, considerably worse than the consensus estimate of a 0.1% production gain, the U.S. Federal Reserve announced Friday. It was the largest decline in IP since January 2007. Industrial Production rose 0.2% in September.

Meanwhile, capacity utilization --- which measures the percent of plants in use --- fell to 81.7% in October from 82.2% in September. Analysts had expected a 0.1%-0.3% rise in the utilization rate.

Production at factories declined 0.4%, utility production declined 1.6%, and mining output fell 0.6%. Also telling: production of consumer durable goods dropped 0.8%.

Analysts said the October industrial production decline adds to the argument that the U.S. housing sector's woes - - the most serious housing slump in more than a decade - - are beginning to spill over into the broader economy:

"The October industrial production statistic certainly is a disappointment. Combined with lower capacity utilization, it suggests the economy is slowing, and it's something that has to concern the Fed," economist M. David Chandler told Bloggingstocks. "This puts added focus on the November and December stats. If we see industrial production slowing in those two months, Q4 will come in very, very weak, and the U.S. economy will be growing at near-stall levels."

Several major pieces of economic news were released this morning, and all were good. Personal Spending rose more than expected, the fastest growth in two years. The Chicago PMI report rose more than expected as well. The Michigan Consumer Sentiment report seemed to hold its own. In addition, the core inflation number came in within the Fed's target range.

This is a major contrast to the numbers earlier in the week. Durable Goods and Consumer Confidence reports were terrible, and both Existing and New Home Sales indicated that there appears to be no end in sight for the housing slump. The only good number was Second-Quarter GDP. However, this was prior to the turmoil created in the markets by the credit crisis.

Then, why did the stock market rally on the bad news and is going down today on these positive economic reports? It's the liquidity. The stock market is driven by money and credit. As there is greater availability and lower cost, the market performs better. Who is the ultimate gatekeeper for this? You guessed it: the Federal Reserve.