Busi­nesses spending again, re­port finds

Daily Local News (West Chester, PA) - - BUSINESS - Joel L. Naroff is pres­i­dent and chief econ­o­mist of Naroff Eco­nomic Ad­vi­sors. He can be reached at 215-497-9050 or joel@narof­fe­co­nomics.com. On the Web: www.narof­fe­co­nomics. com

in civil­ian air­craft de­mand. Of course, the 22 per­cent de­cline came af­ter a 74 per­cent rise in July, so you can see why it is im­por­tant to ex­clude air­craft, both civil­ian and de­fense, from the num­bers. Do­ing so led to a solid in­crease in durable goods or­ders.

That said, the de­tails of the re­port were not that great as most of the gain came from two in­dus­tries, mo­tor ve­hi­cles and com­mu­ni­ca­tions. The rest were down. But there was some truly pos­i­tive news in the re­port.

The best mea­sure of busi­ness cap­i­tal spending, which ex­cludes de­fense and air­craft, posted its third con­sec­u­tive rise. To­tal or­ders are down over the year, but the de­clines are slow­ing.

There was other data re­leased ear­lier this week.

Most no­tably, Tues­day, the Con­fer­ence Board re­ported that con­sumer con­fi­dence surged in Septem­ber to its high­est point since the re­ces­sion. Peo­ple are be­com­ing more pos­i­tive about the la­bor mar­ket. On the hous­ing front, new home sales were off more than ex­pected in Au­gust.

They had jumped in July, so some give back was ex­pected, but it was larger than fore­cast. Again, a lack of homes for sale con­tin­ues to plague the hous­ing mar­ket. That said, home price in­creases are not ac­cel­er­at­ing sharply. In July, the S&P/Case Shiller Na­tional home price in­dex was up 5.1 per­cent over the year. That was a small ac­cel­er­a­tion from the 5 per­cent rise posted in June. Pric­ing pres­sures should con­tinue to build as long as in­ven­tory re­mains low. MAR­KETS AND FED POL­ICY IM­PLI­CA­TIONS: >> It looks like the Fed mem­bers are start­ing to send a loud and clear mes­sage that rates are go­ing up. San Fran­cisco Fed Pres­i­dent Wil­liams, a non-vot­ing mem­ber, chimed in that the econ­omy can absorb a rate hike, adding to the dis­sent­ing voices heard at the FOMC meet­ing. There were three vot­ers who wanted to raise rates in Septem­ber.

As ex­pected, Chair Yellen told Congress there was no set timetable for a rate hike. Given the num­ber of times the Fed has come up to the edge of a hike only to back down, that was hardly news. But the re­cent data, though not great, are still pos­i­tive enough to pro­vide some rea­son to think the Fed feet of stone will start to shuf­fle back to the rate hike precipice.

With the next FOMC meet­ing end­ing on Novem­ber 2nd, only six days be­fore the elec­tion, don’t ex­pect any­thing to hap­pen then. But De­cem­ber re­mains open. Of course, if the data don’t say go, the Fed won’t show, which is the prob­lem with data de­pen­dency.

Joel Naroff Colum­nist

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