Often defined as hard products that have a life expectancy of more than three years, durable goods are products that are used by millions of Americans in everyday life. Examples of durable goods include cars, furniture, jewelry, toys, computers, sporting equipment, cell phones, washers, dryers, ovens, dishwashers, clothing, bricks, and refrigerators.
Because durable goods do not wear out as quickly, they tend to be more expensive than non-durable goods. Since most durable goods are considered big-ticket items, consumers will only make these purchases when they are confident about the economy.
At the same time, capital goods are a durable goods indicator of how businesses see the economy. Capital goods represent the higher-cost capital upgrades a company can make and signals confidence in business conditions.
If the stock market is only as strong as the companies that go into making up the index and their earnings are contingent upon consumer spending, then the durable goods numbers don’t really look all that great. New orders for manufactured durable goods slipped by one percent, or $2.2 billion, to $225.0 billion—the third decrease in the last four months. Analysts had forecasted a January drop of 0.7%. The one-percent drop in January comes on the heels of a 5.3% decrease in December. (Source: “Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders January 2014,â ... Read More