US Durable Goods and GDP Preview: Spending returns to trend, GDP steady

• Durable goods expected to rebound sharply in November

• Third quarter GDP to remain at 3.5%

• Business spending predicted to turn positive

The US Census will release its November Report on Durable Goods-Manufacturers' Shipments, Inventories and Orders on Friday December 21st at 8:30 am EST, 13:30 GMT.  The Bureau of Economic Analysis, a division of the Commerce Department, will issue its third and final revision of third quarter GDP at 8:30 am EST, 13:30 GMT

Prediction: Overall orders to recover from October's steep drop

New orders for durable goods are forecast to rise 1.6% in November as business levels out following October's 4.3% decline. The unusually large drop had been the indirect result of September's one time 119.1% increase in Defense Department aircraft purchases.

Durable goods are a volatile series. They encompass a wide range of manufactured products designed to last three years or more in use. Toasters, shoes, car and eyeglasses are counted but so are large industrial items like commercial and military aircraft. It is these that give the series drama in the months when manufacturers report large orders. In practice it is usually the airliner orders of Boeing Company of Chicago that provide the variation. 

Orders outside of the transportation sector are forecast to advance 0.2% in November after October's 0.1% increase. This category has been falling short of analysts' expectation for six months. The average monthly prediction has been 0.45% and the average number has been but 0.1%.

Business investment: Back to the positive

Business spending represented by the accurate but rather long title of non-defense capital goods excluding aircraft, cap-ex for short, is forecast to rise 0.2% in November following one flat and two negative months. The declines in August and September came after four very strong months from April through July when this group averaged a 1.25% gain each month. This category is a closely watched proxy for business investment though it is not, like the retail sales control group, a line item in the government's GDP calculation.  

GDP: Steady to a 3% year

The third and final revision to annualized third quarter GDP from the Commerce Department is expected to confirm that the US economy expanded at a 3.5% pace in the third quarter. The accounting for gross domestic product, the widest measure of a nation’s economic activity, is subject to two revisions at one month intervals following the initial release as additional data becomes available to the government statisticians. 

If GDP performs as expected the US will have expanded at a 3.3% pace in the first three quarters, the best rate in 12 years.