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Capital goods orders tick down but still strong

Durable goods orders jumped 3% in January, much more than expected. But if you subtract transportation orders, they fell more than expected. My favorite version of these numbers (non-defense, ex-aircraft orders) is shown in this chart, which I consider to be a proxy for business investment spending. While the January number was below expectations, the December number was upwardly revised by about $1 billion, so the net change was a small negative. In any event, this series is notorious for its month-to-month volatility. Abstracting from the monthly noise, business investment is up at an annualized rate of 15.5% since hitting a low last April. That's a strong rebound by any definition. Business investment like this will create a good base for future productivity gains and eventually a return to new hiring.

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