Steve Blitz Morning Notes

It is important to remember that durable goods data are notoriously volatile from month to month so patterns and trends inform more than point estimates. Looking at nondefense capital goods less aircraft the pattern of sales, shipments, unfilled orders and inventories suggests that the worst of the recession is over but we are far from recovery of any shape let alone a V.

Inventories and sales are still in deep negative territory on a year-over-year basis. For those looking to shorter measures of momentum -- new orders are down for the second consecutive month. To the extent that inventory restocking is supposed to help lift the economy past the current quarter, the ratio of inventories to new orders has peaked but the ratio is only down to the peak levels of the 2001 recession (see chart).

All told this isn't great news for the hawks squawking about V-shaped recoveries and inflation. The economy is better in that the economy has moved into a mild recession from a near economic collapse. There is still a long way to go.