Yesterday the markets were looking for the Durable Goods report to show an increase of 3% in new orders. The numbers disappointed however, with growth of only 2.2% reported. You can see an odd pattern for the last seven months on our chart—lackluster growth sandwiching two optimistic months of 3% plus growth in November and December of 2011. At the end of 2011 companies rushed to take advantage of an accounting gimmick that allowed them to expense their purchases for 2011 immediately, saving them on taxes. But before and after the rush, growth in Durable Goods orders was anemic. This is perhaps proof that government initiatives to spur growth simply shift the timing of business that was already baked in. With the Federal Reserve and the federal government gaming the system to create artificial outcomes, economists and investors are receiving false signals about what may be going on in the economy. Don’t be fooled by an economic mirage, a cautious approach to investing is advised.
