Factory Orders Still Down; Personal Income Rebounds

Orders to U.S. factories for long-lasting durable goods fell in September for the third consecutive month, but Americans’ personal income rebounded from the effects of Hurricane Andrew, the government said Wednesday.

The Commerce Department said orders for such goods as cars and computers fell a seasonally adjusted 0.4% to $118.9 billion last month. It was the first time orders had dropped three months in a row since January-March, 1991, during the depths of the recession, and it was the fourth decline in five months.

In two other reports, the government said Americans’ personal income rebounded in September from the effects of Hurricane Andrew, and the federal budget deficit set a new record during the fiscal year ended Sept. 30.

The latest statistics came as President Bush and Bill Clinton clashed over the economy in separate television appearances just six days before Election Day.

“Our economy is doing better than the world economy,” Bush said on ABC’s “Good Morning America.” He cited a Tuesday report showing a 2.7% third-quarter growth rate in the gross domestic product.

But Clinton countered on NBC’s “Today” show that the gross domestic product report amounted to a one-time blip and said, “You can’t evaluate anyone on one three-month performance.”

Although much of the durables drop was concentrated in the volatile aircraft and defense industries, economists said it illustrated the stop-and-go nature of the economy’s long climb out of recession.

They were especially concerned that the backlog of unfilled orders for durable goods fell 1.3%, the 13th consecutive monthly decline, to $452.6 billion, the lowest level since December, 1988.

That’s a sign that factories are easily keeping up with the flow of new orders with their current work force, they said.

A second report from the Commerce Department showed strong 0.7% rebounds in Americans’ personal income and spending after identical 0.2% drops in August caused by Hurricane Andrew.

However, after stripping out the effects of the hurricane and of farm subsidy payments, income rose a paltry 0.1% in September after a strong 0.6% increase in August.

Meanwhile, the Treasury Department said the budget deficit for fiscal year 1992 hit a new record--$290.2 billion--breaking the 1991 record of $269.5 billion.

Economists expect the red ink in 1993 to total as much as $330 billion, restraining the ability of the new President and Congress to stimulate the economy.

Transportation orders fell 8.4% and orders for military goods dropped 15.7%. Excluding transportation, orders would have risen 2.1%. Excluding defense, orders would have increased 0.5%.

A 10.2% drop was recorded for primary metals such as steel. It was the worst since March, 1989.

On the positive side, orders rose 5.6% for electrical equipment and 2.3% for industrial machinery.