Durable Isn’t As Durable As It Used to Be

I didn’t want to let this piece by Neil Irwin in the New York Times, in which he speculates on how the post-COVID economy will differ from the pre-COVID economy, pass without comment. This part is fair enough:

The economy is recovering rapidly, and is on track to reach the levels of overall G.D.P. that would have been expected before anyone had heard of Covid-19. But that masks some extreme shifts in composition of what the United States is producing. That matters both for the businesses on the losing end of those shifts and for their workers, who may need to find their way into the growing sectors.

but this is the part about which I wanted to comment:

But as the extreme spike in first-quarter numbers reflects, there has been a huge reallocation of economic activity toward durable goods. Spending on cars and trucks is 15.1 percent higher than it would have been on the 2019 trajectory; spending on furnishings and durable household equipment is 16.6 percent higher; and spending on recreational goods is a whopping 26 percent higher.

Altogether, durable goods spending is running $348.5 billion higher annually than it would have been in that alternate universe, as Americans have spent their stimulus checks and unused travel money on physical items.

I think there are multiple things going on. First, for nearly a year people haven’t been able to buy larger ticket items. They tend to be the sort of things that people go to stores to look at and consider before buying. But stores have been closed, some permanently, supply chains disrupted, and people have put off buying them until they had more confidence in what was going on.

And, rather clearly, the main effect of the “stimulus packages” has not been to stimulate the economy but to encourage savings:

Current savings translates into future spending and, as the old GE ad used to say, the future is now. That’s what “pent-up demand” means. I’m actually a bit surprised that I would need to explain it.

But one of the factors is that people have been spending more time at home and actually using the furniture, appliances, and other things that fall under the category of “durable goods” and they’ve been wearing out. Things expected to last a lifetime or at least for a decade or so are not standing up to daily use. Everything’s a consumable nowadays.