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Wednesday, May 28, 2014

How an Order for 10 Submarines Led to Misleading News on the Economy

Virginia class SSNGood news: Orders for durable goods — motor vehicles, machinery, computers and other long-lasting items — rose in April, according to data released Tuesday by the Department of Commerce. Most economists expected a decline.

But if we dig into the manufacturing sector data, we see that the U.S. government ordered 10 submarines from General Dynamics in April; that deal was worth nearly $18 billion.

Although the whole order doesn’t count in April’s data, enough of it was allotted to skew the month’s headline number.

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