Three Delayed Data Points Hint at US Economic Health

With Thanksgiving and Black Friday now in the rearview, investors have something else to look forward to: the gradual return of official US economic data. The government’s reopening means previously delayed economic figures are emerging drip by drip, including the US Census Bureau’s releases on durable goods orders (those for items designed to last 3 years or more), retail sales and business inventories. And while these summertime or early autumn data are stale by now, they can help illustrate trends and the state of affairs entering the current quarter. Here is our take on all of it.

We will start with new durable goods orders, which rose 0.5% m/m in September—exceeding analysts’ expectations—as strong demand for electrical equipment, appliances and components and primary metals drove results.^[i] Many products in the first category (electrical equipment, appliances and components) feed into data centers and other tech-related processes, suggesting businesses’ AI-related demand remained robust at summer’s end. Primary metals’ strength builds on July and August’s growth, which may illustrate manufacturers shifting to domestic sources over foreign ones—likely related to the Trump administration’s raising tariffs on imports of aluminum, steel, copper and other metals in the early summer. That said, a longer perspective shows September orders are only up 1.4% y/y, lagging overall orders’ 7.3% growth markedly.^[ii]

Now, September’s rise did slow from August’s 3.0% m/m jump. But most of this came from aircraft and defense orders, which are typically lumpy. Omitting this category delivers a more accurate proxy for business investment—though still incomplete, considering other ways corporations put their money to work that aren’t captured here (e.g., software upgrades, and investment in research and development). Still, widely watched “core” orders (non-defense orders excluding aircraft) rose a solid 0.9% m/m in September, matching August’s upwardly revised 0.9% growth.

Again, these data reflect developments from three months ago. They don’t mean much for forward-looking stocks. But given business investment’s role as a key economic swing factor, this suggests America’s economy was in better shape than many expected entering Q4.

September retail sales hint at the same conclusion. They grew 0.2% m/m, cooling from August’s 0.6% and just missing analysts’ expectations.^[iii] Contracting sales among online retailers and sporting goods, hobby and clothing stores contributed to the slowdown. Some applauded the still-positive results, but others warned the slowdown augurs poorly for the broader economy, rehashing “k-shaped economy” fears in which America’s low-income earners struggle while high earners flourish.

We found this strange considering retail sales, well … grew. Growth is growth, in our view, and that is fine enough for stocks, given pundits’ mixed reactions. This is doubly true, as variability in growth rates is natural, so painting rising sales as weakness seems exceedingly off base to us—even if growth cooled some. This looks especially wide of the mark as preliminary Black Friday and Cyber Monday sales data, released this week, showed swift sales gains, which topped estimates.^[iv] Not that these are critical to the economy or markets, but continued retail strength doesn’t seem to support the notion consumers are tightening their purse strings.

Overall, we think this was just a “meh” report stocks priced a long time ago … and moved on. Yet headlines’ mixed reaction—and folks couching growth as bad—suggests sentiment hasn’t reached euphoria yet.

Finally, retail inventories were flat in August.^[v] Auto and parts dealers’ -0.5% fall was a key detractor, but there seems a likely explanation. Historically, new year models (i.e., 2026 models this year) have hit dealership lots between August and November. But with tariffs and related uncertainty delaying many of this year’s rollouts, dealerships were likely forced to sell older models—drawing down inventories.^[vi] More of a coincidence than some kind of underlying, industry-specific weakness, in our view. Reports suggest 2026 models began reaching lots this fall, which will probably show up accordingly in coming data releases. 

Regardless, August’s flat reading left the Census Bureau’s retail inventory-to-sales ratio (roughly how many months it would take for businesses to clear their shelves) at its 1.37 long-term average.^[vii] Looking back, the ratio has largely floated here since mid-2022 following a pandemic-era spike—as lockdowns kept shoppers out of stores—and drop as restrictions eased.

More recently, though, retailers’ inventory-to-sales ratio has crept down from 1.41 in late 2024. Generally, lower readings signal consumer demand is sufficient to clear stockpiles at a decent clip—and vice versa with higher readings. Thus, the gradual return to normal here suggests demand is broadly healthy—another sign “weakening consumer” fears are false.

Meanwhile, wholesalers’ inventory-to-sales ratio was 1.28 in August, basically at its 1.27 long-term average.^[viii] Here, too, the ratio has crept down since late 2022. Hence, today’s demand environment seems much healthier than widely appreciated—in both business-to-business and business-to-consumer sales. This is, again, ancient history at this point. But the available data do hint that businesses aren’t sitting on an ocean of unwanted or unsaleable inventory today—another indication the economy was healthy as Q3 and Q4 began.