The Census Bureau reported last week that durable goods (ex transportation) shipments were up 2.4% in November year-over-year (NSA). It was the third time in the past ten months that shipments have risen, and the highest growth rate since December 2014. New orders for durable goods (ex transportation) were also up, +3.3%, the fourth time this year. Rather than suggest acceleration, the uneven changes for durable goods display the same “rising dollar” tendencies.

On a trailing twelve month basis, durable goods shipments (ex transportation) tallied $1.83 trillion through November 2016. Through November 2015, the trailing annual total was $1.86 trillion; through November 2014, $1.88 trillion. On a relative basis, the economy of this half of this year may not be getting worse, but that is far from getting better. The occasional positive number provides only a false sense of improvement.

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In terms of capital goods, however, there are only negative signs even in November. Shipments (non-defense ex aircraft) declined by almost 3% year-over-year after falling by more than 6% in October. The 6-month average is -5.6%. The average for new orders of capital goods (non-defense ex aircraft) is now -4.0%.

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The economic accounts so far this year, including durable goods, continue to prove the monetary aspects of this economy. The possibility that the US economy is no longer directly contracting even at the shallow rate that prevailed last year is surely due to the increasing distance from the most direct aspects of the “rising dollar.” The appearance and pace of contraction coincided with the crescendo in financial (especially risk) categories.

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The monetary disruption having ended on February 11, the economy appears to have stabilized again just as it did in 2013. It is this characterization that seems to be most confusing because “we” are directed exclusively toward the binary recession model for economic evaluation. If there is no recession, then by all convention there must be growth. The past five years, however, show very clearly the mistaken application and therefore assumptions.

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Rather than suggest growth, the current economy, like 2013 and even 2014, is only repeating the absence of further contraction in the widespread sense. But, like capital goods, there are still pockets of weakness that are further eroding the economic base so that even if the economy isn’t contracting like 2015, it’s positive numbers in 2016 are still occasional and even less impressive than the positive numbers from before the “rising dollar.”

There aren’t useful analogies for this economic case because it is unique. Though there are many similarities overall to the Great Depression era, the current circumstances really have no historical precedence. I have used the airplane analogy before, and perhaps that is the best one to work with. It’s as if engine thrust is only in one direction; the power can be cut but not resumed. Every time the engines are pulled back, they stay back and the airplane overall only becomes slower. At slow enough speed, flight itself becomes more and more unstable.

The problem with using that analogy is that it creates the expectation of an eventual, catastrophic crash. That may yet be the ultimate end, if nothing intercedes before it’s too late, though the true worst case scenario is one where this uneven deceleration goes on for a very long time further. Even using the flight comparison, a pilot experiencing engine problems can still lower the nose and pick up speed, or adjust other flight characteristics to maintain the appearance of stable flight that much longer.

Monetary characteristics of the “rising dollar” are in many ways the same as when they first appeared in August 2007. The difference is the scale and condensed fashion then versus now; in 2007, “dollars” simply disappeared and almost all at once (twice). The economic consequences of that near total failure were of similar proportions and speed. Since 2011, though there are fewer “dollars” it hasn’t been in the form of panic and complete absence. It is an almost ordered but sustained withdrawal, if punctuated at times (2011, 2013, 2015) by more acute desire for the exit. The economy again follows that pattern.

That being the most likely case, it will be interesting to see if the current liquidation in bonds ends up producing economic effects similar to earlier this year, or those more like the bond selloff, “reflation” and slow burn of late 2013 into 2014.

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