Why do we care about the durable goods report, which the U.S. Census Bureau publishes each month to tell us how big-ticket item sales are going? Let Ian Shepherdson, chief U.S. economist at Pantheon Macroeconomics, explain: “We get lots of information about what businesses are saying, but they don’t always do what they say they’re going to do.”
The durable goods report, Shepherdson says, is a hard-data antidote to that problem. “The one thing that businesses don’t do if they’re worried about the future is invest large amounts in new equipment.”
The durable goods report is an optimism indicator. It tells us if companies are buying new equipment in order to expand, or merely replacing old equipment, or not buying anything at all.
It measures sales in everything from transportation and communications gear, to primary metals.
In recent months, that measurement has been all over the place. There were more airplanes sold, but less big machinery. Investment in the oil sector, for example, has fallen, thanks to dropping oil prices.
But the report doesn’t just measure what items businesses are buying. It looks at consumers, as well. And that can tell us a lot, says Gennadiy Goldberg, a strategist with TD Securities.
“Consumers don’t really make very large-ticket purchases until they feel very secure and they do actually have money saved up,” Goldberg says.
In March, consumers bought lots of cars, but not much of anything else. A cold winter in parts of the country may have been a factor. So, analysts are watching to see if sales pick up in things like vacuum cleaners, refrigerators, computers, and TVs.
In Chicago, 26-year-old Jessica D’Andrea is exactly what analysts hope to see more of. On a sunny spring day, she was shopping for furniture.
“I feel like I’m in a stable enough financial place, that I can,” D’Andrea says. “And I’m moving out into my own apartment for the first time.”
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