Durable Goods Rebound, GDP Steady at 2.8%, Initial Jobless Claims Decline to 213K

How Did Durable Goods Orders Perform?

Durable goods orders rose slightly in October, gaining 0.2% to $286.6 billion after two consecutive months of declines. This improvement was driven by a 0.5% increase in transportation equipment orders, which reached $97.1 billion. Excluding transportation, orders edged up 0.1%, while defense orders lifted overall performance with a 0.4% increase. The modest gains suggest cautious manufacturing activity but provide a positive note for sectors reliant on transportation and defense contracts.

What Does GDP Tell Us About Economic Growth?

The U.S. economy expanded at an annualized rate of 2.8% in Q3 2024, according to the Bureau of Economic Analysis’ second estimate. This figure aligns with initial projections but reflects stronger-than-expected private inventory investment and nonresidential fixed investment. However, consumer spending and export growth were revised downward, signaling potential headwinds in key demand areas.

The deceleration from Q2’s 3.0% growth is attributed to reduced private inventory investment and a continued slump in residential fixed investment. On the price front, the gross domestic purchases index rose 1.9%, while the core PCE price index climbed 2.1%, slightly lower than the prior estimate. Corporate profits dropped $10.2 billion in Q3, reversing a $132.5 billion surge in Q2, with notable declines in financial and international earnings.

Are Initial Jobless Claims Signaling Labor Market Changes?

Initial jobless claims fell by 2,000 to a seasonally adjusted 213,000 for the week ending November 23, continuing to signal labor market resilience. However, the four-week moving average edged lower by just 1,250 to 217,000, while insured unemployment hit its highest level since 2021 at 1.91 million. The steady increase in insured unemployment reflects rising challenges for some segments of the workforce, despite overall stability in new claims.

Forecast

The uptick in durable goods orders and steady GDP growth point to a cautiously optimistic outlook for Q4. However, downward revisions to consumer spending and export growth suggest a potential softening in demand. Labor market trends, particularly the rise in insured unemployment, warrant close monitoring for signs of broader economic stress.

Traders should remain cautious, as near-term risks appear balanced between moderate economic expansion and potential slowdowns in consumer activity. A neutral-to-bearish stance may be prudent for equities tied to consumer goods, while opportunities in defense and transportation sectors could emerge based on durable goods data.