Orders for long-lasting durable goods, such as automobiles, computers and steel, fell a steep 10.5 percent in November, the Commerce Department reported yesterday, matching the record one-month drop posted in January.
Durable goods orders are considered a key indicator of future production and employment levels in the manufacturing sector of the economy, and last month's decline was much larger than analysts had expected. Much of the drop was concentrated in the volatile transportation industry, where orders for airplanes and motor vehicles plummeted 27 percent from the month before. But declines were registered by most other industries as well, and economists said the report confirmed that the U.S. economy would continue to slump in the first three months of 1991.
"I think this is the final nail in the 'no-recession' coffin," said Robert Dederick, chief economist at Northern Trust Co. in Chicago. "This series had been hanging up there nicely and had been refusing to give ground. It had been one of the things optimists pointed to and now it's gone."
Whether a recession has begun is still subject to some debate among economists, but the group that the federal government relies on to make such determinations revealed yesterday that its key group of economists has begun to ponder that question.
The National Bureau of Economic Research, a nonprofit organization based in Cambridge, Mass., confirmed that its Business Cycle Dating Committee convened a conference call last week to talk about the subject. But Benjamin Friedman, a Harvard University professor and one of seven members of the committee, said it's premature to say whether or when a recession started.
"We're not in the forecasting business," Friedman said.
On Capitol Hill yesterday, however, the Joint Economic Committee issued its forecast for 1991 indicating the view among the committee's members that the first recession in eight years had clearly begun.
"It's going to be very tough going in the next few months," warned Rep. Lee Hamilton (D-Ind.), the committee's chairman. "I think individual Americans are very uneasy about the economy right now, and for very good reasons."
The latest survey of consumer attitudes by the Conference Board confirms just how uneasy Americans are.
The Conference Board's December report, released yesterday, showed that consumer confidence in the economy stabilized this month at a historically low level after plunging between July and October. The Conference Board's consumer confidence index for this month was 61.3, down only slightly from the October and November readings, but far below July's 101.7 figure.
The big decline in consumer confidence occurred in the wake of the Iraqi invasion of Kuwait early in August and has been blamed by many analysts for triggering the nation's current economic downturn.
The large increase in gasoline and home heating oil prices that followed the invasion reinforced consumer worries at the same time it was squeezing their pocketbooks and causing them to cutback on other spending. Some analysts regard the downturn as a consumer-led recession and say the key to ending it will be an improvement in consumer attitudes.
In the meantime, the spreading effects of the slump itself are making consumers more wary still of committing themselves to new spending, according to the survey.
"Consumers' continuing disenchantment with prevailing business conditions and their low expectations for the immediate future reflect the increasingly soft economy," said Fabian Linden, executive director of the Conference Board's Consumer Research Center.
"The level of industrial production is down, the unemployment rate is inching up, and there has been little or no growth in the consumer's real personal income for some time now.
"Adding to these day-to-day economic realities is rising political uncertainty -- the possibility of war in the Middle East."
The Conference Board found that nearly one third of 5,000 households surveyed said that jobs are "hard to get," up from 22 percent in July and 29 percent last month. Changes in attitudes such as that explain in part why only 2.6 percent of the respondents plans to buy a new car in the next six months, down from about 4 percent during the summer.
A dearth of new car buying in October and November was one reason new orders for durable goods fared so badly last month. In the absence of orders from dealers, several automakers closed plants for two weeks or more to bring production more in line with the lower level of sales and help reduce the growing number of unsold cars on dealers' lots.
New orders for transportation equipment industry fell by $10.3 billion last month, to a level of $27.4 billion. Orders for aircraft and parts dropped 38.8 percent following a 20.4 percent increase in October. Most of the rest of the drop was in orders for motor vehicles and parts.
Overall, orders for durables received last month totaled $115.9 billion, down from $129.5 billion in October. Last month's figure was the lowest since May 1988.
The Conference Board also reported that help-wanted advertising declined last month in all nine major regions, with the Pacific, East North Central and Middle Atlantic regions posting the steepest drops.
The board's survey of ads in 51 newspapers nationwide revealed that labor conditions in oil-producing states have held up better than anywhere else, the board said. Want-ad volume has proved to be sensitive to labor market conditions.
"The labor market has been weakening for the last six months, and it may be another six months before it turns around," said Conference Board economist Ken Goldstein.
In another economic report issued yesterday, the F.W. Dodge division of McGraw-Hill said the value of new construction contracts hit a five-year low last month. Nonresidential building contracts fell 8 percent and the value of new housing to be built dropped 4 percent, the report said.
But Dodge also reported a surge of 16 percent in public works and utilities projects, a rise led by contracting for an $800 million Alaskan pipeline replacement and repair program that will take three to five years to complete.
"Individual, large projects requiring a long lead time usually go ahead even at a time like this, but the conventional commercial and residential projects are the ones that are hurting for financing in 1990," said George A. Christie, F.W. Dodge vice president and chief economist.