Wednesday, October 26, 2011

Keynesians Confused, Yet Again

Sales of new single-family homes in September 2011 were 313,000 at a seasonally adjusted annual rate, up 5.7 percent from the revised August level, but down 0.9 percent from one year ago.

Keynesian economic forecaster consensus was that new home sales would only come in at 302,000.

Also, the Commerce Department said on Wednesday that durable goods orders excluding transportation rose 1.7 percent. The rise beat Keynesian expectations of a 0.4 percent increase.

CNBC writes that the tenor of the report was further strengthened by a 2.4 percent jump in non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending. Keynesian forecasts were even more embarrassing here. They expected only a 0.5 percent rise.

Bottom line: With an absurd "consumer demand theory" matched up with a belief in "animal spirits" driving the economy, Keynesians have no clue. Ben Bernanke's mad money printing is resulting in what Austrian Business Cycle would forecast, strength in the capital goods sector. Next up will be soaring price inflation, at the producer and consumer levels.

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