When you chart the data, it looks even worse. Data reported by the St. Louis Federal Reserve Bank shows a dramatic downward trend in new factory orders for consumer goods over the past year. Consumer goods are items that you and I might buy like shoes or hats. It's not industrial machines or aircraft.
It matters for two reasons. First, consumer spending accounts for around 70% of U.S. GDP so if factories aren't getting orders, it may be because the consumer isn't buying.
Second, new orders represent future economic activity. The new order comes in and the factory manager will deliver it in the future. If the manager needs to do so, more workers might be hired. If the orders don't come in, the workers might be fired. That's why economists look closely at new orders.
The downward slope of the orders in dollar terms since April 2014 is notable. They have fallen from $214 billion a month in April 2014 to $193 billion a year later. What's worse is that the trend appears similar to the slope in 2008-2009 during the financial crisis. Ugh!
If orders are down, is that something we should be worried about? On its face, it should be particularly troubling to anyone who is invested in consumer discretionary stocks like those held in the Vanguard Consumer Discretionary ETF (VCR), such as Walt Disney (DIS) or Amazon (AMZN). Consumers cut the cable TV contract long before they skimp on the toothpaste or the soap.