Positives on Durable Capital Goods Data and the GDP Revision

By SBE Council at 25 September, 2025, 11:12 am

by Raymond J. Keating -

Two reports on the economy offered some positives on the state of the economy.

After two months of decline, new orders for manufacturers' durable goods grew by 2.9 percent in August, according to the latest report from the U.S. Census Bureau.

Excluding transportation, new orders were up by 0.4 percent in August. And excluding defense, new orders grew by 1.9 percent.

In terms of new orders overall, the trend meandered into early 2025, and then volatility kicked in, largely due to costs and uncertainties surrounding tariffs. (See the following chart.)

Source: Federal Reserve Bank of St. Louis, FRED

Looking at capital goods (that is, goods that produce other goods, or investment goods), new orders increased by 4.8 percent after two months of significant declines.

And focusing on nondefense capital goods excluding aircraft, which is an indicator for private investment in equipment and software in forthcoming GDP data, orders actually increased by 0.6 percent in August, after a 0.8 percent increase in July.

It's also worth considering shipments of manufacturers' durable goods during the month. After increasing by 1.6 percent in July, shipments declined by 0.6 percent in August. On the capital goods front, shipments declined by 0.6 percent in August, including a decline of 0.3 percent in nondefense capital goods excluding aircraft.

Source: Federal Reserve Bank of St. Louis, FRED

As noted in the above chart, since October of last year, the trend has been up in terms of both shipments and new orders of nondefense capital goods excluding aircraft.

Meanwhile, GDP revisions pushed up real growth in the second quarter - revised from 3.3 percent to 3.8 percent. In fact, the first estimate of second quarter real GDP growth was 3.0 percent, and it, again, now stands at 3.8 percent.

The notable parts of the upward revisions since the first estimate were real personal consumption expenditures increasing from 1.4 percent to 2.5 percent, and private fixed nonresidential investment (or business investment) from 1.9 percent to 7.3 percent, including an upgrade in real intellectual property products growth from 6.4 percent to 15.0 percent.

While there remained much noise in real GDP over the first two quarters of this year, these upward revisions certainly are welcome.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .