If it wasn’t for America’s war machine, the economy would be deep in recession. Defense spending (aircraft and parts) soared 148% in the last 3 months – biggest such rise since 2007 managing to squeeze Durable Goods Orders overall to unchanged in Nov (vs -0.6% exp). That’s the good news. Everywhere else you look bad. Core Capex fell 1.93% YoY – the 10th consecutive YoY drop – something not seen before outside of recession.

As Bloomberg breaks it down, the pause in equipment orders represents one of several challenges facing American producers, who are contending with a strong dollar, tepid overseas demand and a recent inventory overhang. At the same time, resilient consumer demand that includes steady growth in auto sales is helping soften the blow to manufacturers. Bookings for non-military equipment excluding planes declined 0.4 percent after a 0.6 percent October gain that was about half as much as initially reported, data from the Commerce Department showed Wednesday. The value of orders for all durable goods — items meant to last at least three years — was little changed

Shipments of non-defense capital goods excluding aircraft, which are used in calculating gross domestic product, decreased 0.5 percent last month after a revised 1 percent slump in October that was twice the previously estimated decline. The figures indicate fourth-quarter capital spending will cool after a jump in the previous three months.

Spending on equipment increased at a 9.9 percent annualized pace in the third quarter, the strongest since last year, Commerce Department figures showed Tuesday in its final estimate of GDP.

Defense Spending New Orders has soared 148% in the last 3 months… the biggest rise since 2007

As Bloomberg puts it, “orders for military equipment jumped 44.4 percent last month, the most since April 2014. Excluding defense hardware, durable goods bookings fell 1.5 percent.”

The spike in defense spending dragged YoY Durable Goods Orders into the green