Charting Stocks

The DJIA futures were set for a higher open this morning as orders for durable goods unexpectedly “jumped”  in February, which “surprised” many economists. Well,  at least that was the headline on  the major financial news sites but if we look at the data for ourselves, or even look past the headline and actually read some of the articles we realize that there isn’t  cause for optimism at all. The devil is in the details.

Yes, the media reporting was correct. Orders for durable goods rose 3.4% in February (According to the Commerce Dept.) but somewhere  towards the middle of each the news articles we learn that THE GOVERNMENT REVISED DOWN JANUARY’S  NUMBERS TO – 7.3% FROM A PREVIOUSLY ESTIMATED – 4.5%.  [Please excuse the shouting]. This Newsweek article casually makes mention of this in the last paragraph of the page.

The mainstream  fails to emphasize that almost half of February’s increase was defense spending. In fact, defense spending jumped 35% from the previous month! Orders for non-defense capital goods, though rising 6.6% in February, was revised down to  – 11.3% in January which was TWICE as bad as previously reported.

Needless to say when you have an index which has fallen for a record duration (6 months), and after falling a record 7.3% in January, it is not difficult to have a good month here and there. The housing market data (starts, sales, etc)  gave several up months and some were quite large but they usually came after a previous record decline.

Bottom Line – Digging through the actual numbers reveals a slight uptick in February which was led by defense spending. Other gains reported are almost completely offset by the upward revisions of losses in January.

We need to pay closer attention to the data rather than the headlines. Sure, it’s better to have an increase in economic activity than a decrease, but the media most make a better effort in getting all of the important data out. The fact is that the increase in February, coupled with the revised decline in January doesn’t amount to much to be optimistic about.

If you’ve ever wondered about the optimistic media bias , I encourage you to perform this exercise – Find the major website’s articles on this story (written BEFORE this post) and see if any of them included the previous revision data in either the headline or first paragraph. If you find one, please post it in the comments. (The government press release, rightfully, mentions it in the first paragraph).

Here are  the related article links on mainstream sites (Read the headlines):

MarketWatch
NewsWeek
CNBC
Yahoo Finance
Fox Business

Related posts:

1. Mainstream Media Bailout Bill Introduced
2. Bailout for The Mainstream Media May be Next
3. Unemployment Jumps to 8.1%; 25 Year High
4. Jobless Claims Jump; Durable Good Orders Drop
5. Empire State index falls to new record low