Growth in US Durables Spending: Assessing the Impact of Consumer Ability and Willingness to Buy

Abstract

This study makes use of two sets of variables in order to explain the behavior of growth in US consumer durables spending. The first set includes income and wealth growth as the determinants of consumer “ability to buy” in addition to changes in real interest rates. The second set includes detailed consumer durables-buying attitudes as the determinants of consumer “willingness to buy.” Our estimation results for 1988–2019 reveal that income and wealth growth in addition to changes in real interest rates significantly explain durables spending growth. Attitudinal factors that significantly explain durables spending growth include the difference of opinion of consumers as to whether prices are low or high, whether interest rates are low or high in addition to the difference of opinion of consumers regarding prosperous times versus uncertain future. Such evidence highlights the importance of detailed consumer durables-buying attitudes and offers insightful policy implications for stabilizing growth in durables spending.