Tech Gadgets vs Durable Goods

Its the first Thursday of the month, so we will be getting monthly sales from many retail stores throughout today. Related to that, I am fascinated by this story in the WSJ.

Durable Goods, Furniture, Apparel are out; In: Laptops, iPads, iPods; the staycation crowd are buying Blu-ray video players and big plasma screen televisions. And one retail exec called the iPhone “a new fashion accessory.”

Here’s your WSJ ubiqcerpt™:

“Americans are spending more on electronics like iPads and flat-screen televisions and less on durable goods like furniture, washing machines and lawn mowers, according to government data released Tuesday.

The shift reflects a change in priorities for American consumers. After pouring money into all aspects of their homes during the previous decade, consumers are redirecting their purchases to eye-grabbing technology and socking away more of what’s left over into savings. Apparel company executives are worried the lure of electronics will eat into their sales as the back-to-school season gets under way.

Outlays for televisions, computers, video and telephone equipment grew 1.8% in the first six months of this year, compared to the first half of pre-recession 2007, the Commerce Department said Tuesday. By comparison, spending on appliances decreased 3.6% during the same period, and spending on furniture decreased 11% during that time.

Overall, consumer spending stayed flat in June from the previous month, the Commerce Department said Tuesday. Meanwhile, the U.S. savings rate ticked up to 6.4% in June from the previous month, its highest point in a year and far above its pre-recession level.” (emphasis added)

I cannot judge by my own spending — three years ago, we bought a house that needed major renovations — but the success of Apple’s sales throughout the recession makes the point.

And the Journal makes the case that it is in not just Apple, but the entire tech sector that is enjoying consumer interest . . .



Counter-Cyclical Spending (during recessions) (March 17th, 2010)

Tech Gadgets Steal Sales From Appliances, Clothes
WSJ AUGUST 3, 2010

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