State of Business: The Decline of Durables

U.S. consumers are spending more—but U.S. manufacturers are enjoying it less. Behind this apparent paradox lies one of the profound changes in the economy: Americans are spending a steadily increasing proportion of their disposable income on services, and a steadily smaller proportion on goods, notably durable goods. This worries economists, for seldom if ever has the economy boomed without an upsurge in spending for durables. Such a surge does not seem to be in the cards this year, according to the Federal Reserve Board's quarterly survey of consumer buying intentions. Though car-buying intentions are up somewhat from a year...

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