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. Examples include large and small appliances, consumer electronics, furniture, and furnishings. For this reason, investors often track orders for durable goods to provide guidance on the economic outlook. Purchases of durable goods generally indicate the economy is improving as households and businesses are optimistic about their finances. Investors then start collecting company shares and expect an increase in share prices in the future.
- Consumers then replenish their frozen meals each time they visit the grocery store, often choosing the brands they already recognize and enjoy.
- These goods are intended to deliver sustained economic value over an extended period, providing reliable utility and durability.
- The sector contributes approximately $2 trillion to the United States gross domestic product (GDP).
- Consumer packaged goods are cheaply sold and replaced often.
Consumer Goods: Meaning, Types, and Examples
When the production of these nondurable goods grows, it is a good economic indicator that the economy is growing as a whole. Changes in durable goods can mean the same, with growth in production equaling growth in the manufacturing sector. This growth in production can also be indicative of higher future interest rates. Examples of durable goods include furniture, durable goods and non-durable goods cars, large appliances and jewelry.
What Are Consumer Goods?
Thus, we do not differentiate whether goods are sold to the household sector or the business sector. Longevity and Cost-EffectivenessDurable goods are designed to last for several years, making them a cost-effective choice over the long term (Kesavan, 2005). Although the initial purchase price might be higher, the extended lifespan of these goods means consumers do not need to replace them frequently, leading to potential savings. The consumer packaged goods industry is one of the largest sectors in the U.S. economy. Consumers continue to purchase consumer packaged goods even during economic downturns, though they may hold off on buying durable goods during the same time. While non-durable goods or soft goods are those goods that have a short life cycle.
Fast-moving consumer goods are nondurable products like food and drinks that move rapidly through the supply chain from producers to distributors and retailers to consumers. Specialty consumer goods are relatively rare and are often considered luxury purchases. They are usually marketed by brand and geared to a niche market of affluent consumers.
Economics of Non-Durable Goods
Consumers are ready to buy a durable good today but can always wait and purchase it tomorrow. Once they have bought a durable good, they do not need to buy in the near future. Given this, current demand is affected by the expectations of future prices, the degree of the patience of consumers and the way they value the good. The demand faced by the firm in each period depends on how many consumers did not purchase the good in the previous periods. Orders and shipments of durable goods are reported by the Census Bureau monthly. Orders for durable goods are an important leading indicator.
What Are Fast-Moving Consumer Goods?
In May, orders for capital goods increased 0.5% to $83.7 billion. Business durable goods also include trucks, buses, boats, and aircraft. In fact, commercial aircraft are a large component of durable goods.
More specifically, they’re products that are used for more than three years. Orders for durable goods rose 2.2 percent in February, according to figures released this morning (PDF). Shipments of durable goods were virtually unchanged in February.
