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 ubiq-cerpt™:

“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 . . .

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

Sources:
Tech Gadgets Steal Sales From Appliances, Clothes
EMMELINE ZHAO
WSJ AUGUST 3, 2010
http://online.wsj.com/article/SB10001424052748703545604575407580208239338.html

Category: Consumer Spending, Retail, Technology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

29 Responses to “Tech Gadgets vs Durable Goods”

  1. Kort says:

    It’s anecdotal, I know. But yet another story of strategic defaults turning into buying more Ipads. And I’d imagine walking away from a home (or being prepared to) would lead to less durable goods (why buy a new dishwasher for a house I’ll be evicted from within a year? But hey, saving $2000 on a mortgage means…more ipads)

    http://www.bloomberg.com/news/2010-07-29/americans-splurge-on-ipads-while-broke-in-new-abnormal-economy.html

  2. BR,

    seesome of: The New Abnormal
    Americans are broke and depressed—and also swilling $3 lattes and waiting in line for iPhones. Welcome to the schizophrenic economy…
    http://www.businessweek.com/magazine/content/10_32/b4190050473272.htm

    http://www.bloomberg.com/news/2010-07-29/americans-splurge-on-ipads-while-broke-in-new-abnormal-economy.html

  3. ToNYC says:

    Electronic Media are our drugs of choice in the 21st Century. They are an extensions of our mental connections and projections, and are simply what we crave rather than need.

  4. V says:

    Thank god there’s no built-in obsolescence in my washing machine. Someday I guess it will be required to access the internet …

  5. This Is Your Grandfather’s IPad as Japan Elderly Embrace Apple

    Hikosaburo Yasuda says he knows a trend when he sees one and plans to buy Apple Inc.’s iPad to keep up with junior members in his computer club. Yasuda is 95.

    “It’s important to always try new things, otherwise you get left behind,” Yasuda said. “All these books in just one place, and so many familiar, classic titles that I’ve never had a chance to read. I want to buy the iPad just for that.”

    Yasuda and his peers, looking for easier ways to browse the Web and send e-mails, are a potentially lucrative demographic for Apple as the proportion of people aged 65 and over climbs to records each year in countries including the U.S., China and France. Japan has the world’s oldest society, with the elderly accounting for an estimated 22 percent of the population, almost triple the global average.

    “The iPad is a good tool for the elderly because it’s very forgiving of mistakes, something the seniors fear when dealing with computers,” said researcher Takahiro Miura of the University of Tokyo, whose team is working with International Business Machines Corp. on using computers to help senior citizens rejoin the workforce. “Unlike the PC, it doesn’t require prior knowledge.”

  6. ashpelham2 says:

    I don’t doubt that we are heading into a new world, where everything is wired and we are constantly connected, if we aren’t already there. The thought of dropping my data package on our phones just scares the hell out of me, but we have our own budget issues at la casa….

    The disappointing thing to me is how little a lot of America spends on it’s appearance. I know, I know….America is fixated on looks and appearances, but there is a huge swath of people who simply don’t know how to dress appropriately or with much style. That is an artform that is losing ground to cheap, easily worn out clothing from places like malaysia and vietnam. I am sure many of you here who have to “dress up” to go to work can pick out a cheap tie or suit from the well-made ones.

    We like to see people who look nice, but we aren’t willing to make that investment in ourselves….

  7. ashpelham2 says:

    MEH @9:08am – That article you posted from businessweek is fascinating. One quote stuck out in my mind – “it was all dollar stores and luxury”.

    If there is evidence needed to back up this week’s discussion of two economies, that is it. While I’m sure there are some people who drive Mercedes Benz’s and shop at Dollar General, it’s probably more likely that some people are down to their last dollars, while others are having a better year than imaginable, while the ones in the middle, dwindling as they may be, are truly caught out in left field right now.

  8. Jim says:

    I believe part of this underlying trend is the move to improved personal productivity. If you have limited free cash flow the incentives are to maximize the use of those dollars. The Tech industry fills that niche. Whereas a good washer and dryer can last you a decade or two and until they show great improvements in cycle time there is no real incentive to upgrade. As far as fashion and clothes go, from a male perspective, if you buy quality up front and you take good care of your clothes; they will last a long time also. A well maintained vehicle will also last a decade or more.

    An iPad, a new smartphone, or other tech gear can lead to dramatic increases in personal productivity. I got the iPad when it came out and it has in many ways revolutionized my productivity away from the office. I get more things done in less time and that has freed up the time I spend at home with my family. Granted one of them always takes the iPad as soon as I walk in the door with the two year old being the most demanding.

  9. GeorgeBurnsWasRight says:

    I think a lot of it is due to lower house sales. A lot of durable goods get bought when people move to a new house, especially if it’s larger than their previous one. And with all the repos there’s likely a lot of newer used durables on the market.

  10. wally says:

    Don’t you think this is also reflective of who is spending? Some people have money for toys; some do not.

  11. Deflator Mouse says:

    GeorgeBurns- good point. Also, eBay and CraigsList make it easy to find decent used furniture. But gadgets- they’ve gotta be new.

  12. Bruman says:

    Hey Barry, got an iPad yet? I’ve been holding out, but just yesterday I was reading a document on a monitor thinking, “this would be so much nicer to read on an iPad.”

    It’s like when you get that first sniffle, and you know you’re likely to be catching a cold soon (though an iPad is certainly more pleasant than a cold).

  13. KidDynamite says:

    washing machines? there’s an app for that…

  14. Mike in Nola says:

    Bruman:

    It depends on what you’re reading. If the item is from a web page, the iPad is fine. But for electronic books, the iPad is not as good as the older e-ink screens on the kindle and its clones. Somehow I got involved in looking the issue up and the reviews seem pretty uniform in that respect. It seems to come down to screen brightness and reflectivity: kindle, et al, are more like reading a real book with a matte finish and high contrast in reflected light outdoors; iPad’s screen is too bright indoors for long reading sessions and too shiny outdoors.

    Of course, if you just want to splurge, an iPad is good. Saw one for the first time a couple of days ago. Nice gadget but not my cup of tea. Smallness of screen made it hard to click links on some pages with a finger. It was perfect for the owner, tho. She was a ditzy 55 year old who does light web surfing and email and needed portability and simplicity. She managed to learn how to buy some Springsteen by herself, which says a lot about simplicity.

  15. paulyarbles says:

    One word: neoteny.

  16. Joe Friday says:

    ANDROID OUTSELLS iPHONE

    (CNN) — Despite all the hoopla about the new iPhone 4, Google Android phones outsold Apple’s iPhones during the first six months of this year, according to market data released on Monday by the Nielsen Company.

    “While the iPhone has been the headline grabber over the last few years in the smartphone market, Google’s Android OS has shown the most significant expansion in market share among current subscribers,” Nielsen says in a blog post.

    http://edition.cnn.com/2010/TECH/mobile/08/02/nielsen.android.apple/

  17. formerlawyer says:

    I have my doubts. I would echo GeorgeBurnsWasRight in suggesting that the change has more to do with housing sales than anything else.

    “New home sales play a significant role in the economy and contribute to economic momentum through consumer purchases of furniture and appliances.”

    from:http://www.reuters.com/article/idUSN2113038220100621

  18. VennData says:

    Recessions are caused by an economy not producing enough of the things people want, and too much of the things they don’t. The beauty of American capitalism is that we allow our fixed capital to adjust to this, if they can.

    Thanks to Tim Geithner for saving American capitalism so we can allow this to proceed. Where were you when they were talking about bank stress tests, stimulus, fin. regs? Making fun of Geithner because you don’t like the way he looks? Time to re-access and re-evalute.

    http://www.economy.com/mark-zandi/documents/End-of-Great-Recession.pdf

  19. jopo says:

    does anyone actually buy ishit anymore? that’s soooo yesteryear.

    ~~~

    BR: Not according to the sales data . . .

  20. Mike in Nola says:

    Me, I’m gonna stop paying my mortgage so I can get one of these:
    http://gizmodo.com/5605369/who-wants-to-drive-the-vw-beetle-powered-by-poo?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+gizmodo%2Ffull+%28Gizmodo%29

    VennData: Hope that was a tongue in cheek post :) More like he saved the rich at the expense of the middle class and elderly who would rather own CD’s than “risk assets,” aka crap that you get greater fools to buy.

    Joe Friday: A poster over at ZH has what I think are some pretty good insights into the evolution of the mobile market. Link to latest post:
    http://feedproxy.google.com/~r/zerohedge/feed/~3/mMHQZf6Uxvk/android-now-outselling-ios-explaining-game-chess-google-plays-smart-phone-space

  21. Bruman says:

    Nola Mike: I have a Kindle and like it very much. What iPad seems to do well is web page reading and also reading PDF files that get sent via email.

    Barry’s “Bailout Nation” works pretty well on the Kindle, though occasionally charts and graphics are difficult to read.

    I agree that screen glare can be an issue on an iPad, although I’m sure there are matte screen protectors that solve this (I have one on my iPhone that works surprisingly well – I didn’t think I’d like matte, but it works great). It’s also nice that the Kindle is only 10 ounces or so.. The iPad’s weight is also noticeable when using it as an e-book reader.

  22. Broken says:

    Higher savings, fewer houses, buying electronic gadgets…..

    I think we’re turning Japanese, I really think so.

  23. ashpelham2 says:

    And a generational change as well, Broken. We are moving from a consumer led economy to an economy where government and government contracts are the primary focus.

    The boomers aren’t going to need the same stuff, or the volume of it, as they did when they were raising people like me.

  24. lalaland says:

    Cat Physics is way more fun on an iphone than a lawn mower -

  25. blueoysterjoe says:

    I haven’t been as hard hit as a lot of people, but I have definitely been in the frugal mood these last couple years, and I think things like the iPhone player, bluray, laptops, etc. are feature dense, giving me a lot of bang for the buck. Whenever I feel the need to consume something new and interesting, I have a treasure trove of possibilities, like apps and gorgeous movies, that really aren’t that expensive.

  26. Mike in Nola says:

    bruman:
    can you read anything but Kindle books and newspapers on a kindle?

    If I could check out kindle books from the Houston library, I might consider one. Also, if I could get newspapers as cheap on the kindle. However, the FT costs more on the kindle than a web subscription to FT.com with more features. The Houston Chronicle costs more also.
    The Houston Public Library has eBooks, but that seems to be an Adobe product.

  27. jonhendry says:

    Mike in Nola: “can you read anything but Kindle books and newspapers on a kindle?”

    Yes, you can read pdfs (that works best on the larger DX), html files, .doc files, plain text file, .mobi ebook files, etc.

  28. Bruman says:

    As jonhendry says, yes you can, but it is a bit clunky to get the info onto the Kindle. The easiest way is to email it to your kindle’s email address, but Amazon will charge you for it. It’s not all that much, 25 cents or so, but it’s a bit annoying.

  29. diogeron says:

    De aquerdo, mi amigo but Jim Cramer’s been saying this for at least a couple of years, not that it changes the veracity of the statement.