Capital Goods Orders Weak Again

Orders for capital goods were weak again.  I focus on non-defense, non-aircraft orders.  (Aircraft are important, but orders are very lumpy, so for month-to-month changes, I pull them out.)  The last two months have been disappointing:

The data have plenty of wiggles, so two down months do not constitute a trend.  However, two down months raise my level of concern.  If business capital spending falters at the same time that housing is cratering, the economy could slow down much more than I’m anticipating.  I’m not yet changing my forecast for 2007, and I’m certainly not forecasting a recession, but I’m repeating my old mantra:

Business Strategy Implications:  There’s one chance in four of a chance of recession next year, and it’s time to do some contingency planning.