The U.S. saw durable goods orders increase to nearly $233 billion in August, according to new data from the U.S. Census Bureau.
“Excluding transportation, new orders increased 0.4 percent,” the agency said in a report. “Excluding defense, new orders increased 0.7 percent. Machinery, also up four consecutive months, led the increase, $0.5 billion or 1.5 percent to $31.2 billion.”
Andrew Hunter, senior economist at Capital Economics, told Business Insider that shipments are expected to rebound by more than 30 percent annualized over the third quarter as a whole.
“That suggests that, after falling by 35.9 percent annualized in the second quarter, business equipment investment will also rebound by more than 30 percent in the third,” Hunter said, according to Business Insider. “Although other sectors of the economy are clearly still struggling, this confirms that the overall hit to equipment investment from the pandemic has been far smaller than during the financial crisis.”
Economists say the uptick in durable goods orders is based on, in part, significant increases in orders for machinery, metals and computers and electronic products, Business Insider reported.
Still, growth was offset as declines were seen in orders for electrical equipment, appliances, fabricated metal products and components, according to the Census Bureau report.
Non-defense capital goods excluding aircrafts saw a 1.8 percent increase in August. In July, the number was 2.5 percent, according to the data. Shipments in the same category, which is the source data for equipment investment in gross domestic product (GDP), increased by 1.5 percent in August after surging by nearly twice that in July.
Separately, in research published by the Opportunity Insights, a Harvard research enterprise, high-income households reduced their spending by 17 percent, and low-income households reduced their spending by 4 percent as measured through June 10. In contrast, households in the bottom 25 percent, as measured by income, kept spending at the same levels as had been seen before the pandemic.
The frugality from the highest earners could jeopardize the speed of the U.S. economy’s recovery, experts warned, because many lower-income jobs depend on that spending.
“The pattern of spending reductions during this recession differs sharply from that of prior recessions, during which spending on services remained essentially unchanged while spending on durable goods ... fell sharply,” researchers found.
