So far the economic retrenchment has persisted into February, outlasting any significant January weather. The latest worrisome figures came in the form of durable goods and especially capital goods. The former is another peg in the consumption side while the latter is one of the few glimpses of wealth creation (if far from a complete one). Both sides, demand and supply, have had a rough run under the “rising dollar.” Like retail sales, it is clear that the economy is no longer just sputtering along and is now poised precariously.

Shipments of product are not moving very quickly at all but the pace of new orders has seriously slackened which does not suggest this is a “transitory” development. New orders for durable goods ex transportation have been below 1% year-over-year in both January and February; while new orders for capital goods non-defense non-aircraft were flat in both months (February was actually slightly negative).

ABOOK March 2015 Durable GoodsABOOK March 2015 Durable Goods Cap Goods Shipments

The pattern continues to resemble the pre-recessionary periods before the dot-com recession and Great Recession. In that sense, this latest decline in growth prospects is almost exactly timed to the onset of those prior recessions, dated backward to their respective elongated “peaks.”

ABOOK March 2015 Durable Goods Elongated Cycles

We know that these past few months are unlike last year’s “winter” problem as even the seasonally-adjusted figures have picked up the deficiency. Capital goods have declined for five consecutive months, a negative string not seen since the 2012 global slowdown. And, as noted above, it is not just the supply side undergoing a potential inflection as overall durable goods in the adjusted set have also declined the last five months.

ABOOK March 2015 Durable Goods Cap GoodsABOOK March 2015 Durable Goods Orders ex Trans

That places the “dollar” once more as proficient in anticipating this kind of economic backslide where the unemployment rate and Establishment Survey have the FOMC dreaming of something else entirely. Given that observation, we have to then also consider the scale of the “dollar’s” rise, and the related oil price collapse, which does not suggest a quick turnaround nor simply the “usual” volatility to the downside. In other words, if the “dollar” and WTI are correct in the timing of these moves, we need to factor their size scales as well. With new orders in both durable and capital goods being depressed far more, so far, than shipments, that would seem to corroborate the “dollar” view that there is more negative to come and that this is far more than the usual and expected disappointment.