Consumer Durables: What Part of Retail Sales Are They? (original) (raw)

What Are Consumer Durables?

Consumer durables, also known as durable goods, are a category of consumer goods that do not wear out quickly and therefore do not have to be purchased frequently. They are part of core retail sales data and are considered durable because they last for at least three years, as the U.S. Bureau of Economic Analysis defines. Examples include large and small appliances, consumer electronics, furniture, and furnishings.

Key Takeaways

• Consumer durables, also known as durable goods, are goods that do not need to be purchased very often and last for at least three years.
• Economists keep a close eye on the consumption of consumer durables, as it is considered a good indicator of the economy's strength.
• Consumer durables include appliances such as washers, dryers, refrigerators, and air conditioners; tools; computers, televisions, and other electronics; jewelry; cars and trucks; and home and office furnishings.
• Nondurable goods, as defined by the U.S. Department of Commerce, have a shelf life of less than three years; many can be recycled.
• Examples of nondurable goods include perishable food products, such as milk, vegetables, meat, and fruit; products made of paper and paperboard, such as newspapers, books, and magazines; trash bags; disposable diapers; and towels, sheets, and pillowcases.

Understanding Consumer Durables

Durable goods derive their name from the fact that they last in value for a relatively long time. An individual’s wealth is preserved by spending a high proportion of their income on durable, investment, or capital goods because the goods retain their economic value for longer periods of time.

Investors, business owners, and economists closely monitor expenditures and new orders for consumer durables as a sign of sustainable economic growth. Durable goods consumption leads gross domestic product (GDP) over the business cycle. So, if durable goods is above its consumption trend, then the GDP is also likely to be above its trend in the next quarter.

Some examples of consumer durables are large and small appliances, furniture and furnishings, carpets and rugs, rubber tires, lead-acid automotive batteries, consumer electronics, luggage, sporting goods, and household goods. Automobiles, mobile homes, boats, and fine jewelry are also durable goods.

Consumer Durables vs. Nondurable Goods

The basic difference between durable and nondurable goods is that the former lasts for three years or more, while the latter is used up in fewer than three years. Also, durable goods maintain their economic value much longer than nondurable goods.

Durable goods tend to be more expensive than nondurable goods, so people usually invest in them when the economy is good, and they are feeling prosperous.

However, this rule of thumb doesn't always hold—consumer spending on durable goods rose during the COVID-19 pandemic (after a brief but sharp contraction), which battered the economy. Lockdowns and social distancing reduced the demand for services, while government subsidies intended to help people weather the crisis financially increased disposable income.

Categories of Consumption

Consumer goods are divided into the categories of nondurable goods, durable goods, and services.

In August 2024, expenditures on consumer goods were $16.09 trillion.

In August 2024, consumer durables spending was $2.06 trillion. This sector's main growth drivers were (1) motor vehicles and parts and (2) recreational goods and vehicles.

Examples of Consumer Durable Goods Companies

Some publicly traded consumer durables producers include Kimberly-Clark Corp., ABB Ltd., Johnson Controls International PLC, The Clorox Co., Mohawk Industries, and Whirlpool Corp.

These companies are divided into subsectors of containers and packaging, electrical products, industrial specialties, specialty chemicals, home furnishings, and consumer electronics/appliances.

What Are Some Examples of Consumer Durables?

Consumer durables, also known as durable goods, are products that last for three years or more. They include mobile homes, large and small appliances, furniture and furnishings, carpets and rugs, automobiles, rubber tires, lead-acid automotive batteries, boats, consumer electronics, luggage, sporting goods, household goods, and fine jewelry.

What Is the Difference Between a Durable Good and a Nondurable Good?

The principal difference is that while a durable good lasts for three years or longer, a nondurable good is used up in fewer than three years. In addition, durable goods hold their economic value for much longer than nondurable goods.

Why Are Durable Goods Important?

The purchase of consumer durables is considered an economic growth engine. As individuals purchase more durable goods, this helps boost the economy. Increased demand leads to more jobs and more spending.

The Bottom Line

Consumer durables are goods with staying power. The U.S. Bureau of Economic Analysis defines them as lasting for three years or more, unlike nondurable goods, which are used up in less than three years.

Consumer durables hold their economic value better for longer than nondurable goods, and their sale helps drive the U.S. economy. When the sales of consumer durables are up, it generally forecasts a rise in GDP in the next quarter because consumers tend to purchase them when they are feeling prosperous.