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Mark Tweedy has more than 30 years of retail experience, and he says he is used to January being a slow sales month.
But this year, the Lowe’s appliance salesman sees dramatic evidence that customers are doing everything they can to save money on big-ticket items such as washers, dryers and refrigerators.
One day recently, Tweedy sold a dryer at Lowe’s Lynchburg location to a woman who had driven up from Danville. The woman had made the 140-mile round trip to save less than $50.
“People tend to be more cautious with their buying now,” Tweedy said. “They’re more selective.”
What Tweedy has seen on the showroom floor has been echoed nationally. Sales of durable goods – expensive goods designed to last for three or more years – fell by 1 ½ percent in November, the Census Bureau reported Jan. 6. Two weeks earlier, the Commerce Department had forecast a drop in durable goods sales of only 1 percent.
Mike Bradley, part-owner of the Sears store on Nelson Street in Lexington, said customers seem to be flocking to either high-end or cheaper products.
“Some people come in and buy the most expensive, and some come buy the cheapest,” he said. “The ones with good jobs and money are coming in and buying, and people without money are just doing what they have to in order to get by.”
Bradley said that because fewer people are building or buying new houses, most of his sales have come from customers who are replacing appliances in their existing homes.
Sales of durable goods are usually considered an important indicator of the willingness of American consumers to commit to the purchase of expensive household goods, said Linda Hooks, professor of economics at Washington and Lee University.
New orders for durable goods have dropped in the last four months, though November’s drop was less severe than the 8.5 percent decrease that the Census Bureau reported in October. New orders for durable goods were worth more than $185 billion to the American economy in November. The bureau measures only orders to domestic companies.
Sales of nondurable goods dropped by 7.4 percent nationwide when compared with the same month last year, though that figure was also influenced in recent months by the rapidly dropping price of oil, which is considered a non-durable good.
Ray Owens, an economist at the Richmond branch of the Federal Reserve, said consumers are trying to make durable goods like automobiles and appliances last longer to save money.
“Usually you can push that car another year or two with some minor repairs, and that’s what people are doing,” Owens said. “Households whose incomes are pinched and who are worried about job security are cutting back on purchases of durable goods.”
Owens warned that the slowing sales of durable goods could lengthen the current recession.
The data appear to show that American consumers are becoming careful with their money as they confront increased risks of unemployment and as many households attempt to pay down high credit-card debts.
Increasing inventories of durable goods also reflect the slowing economy. Inventories have increased 16 of the past 17 months and rose in November by a half percent to $342.7 billion, the highest value of inventoried durable goods since 1992.
In Staunton, Sears store owner John Tulloss has noticed a new buying pattern for consumers.
“People are buying more things that they need for their homes instead of pleasure items,” Tulloss said. “It’s the new washing machine instead of a 50-inch TV.”
Tulloss also said sales of wood have increased at his store as customers bought supplies to make money from woodworking projects.
Back in Lynchburg, Tweedy is waiting to see if springtime brings some signs of economic recovery. He said he is not bothered by the slow sales in January and is content to bide his time.
“Usually things pick up in the spring,” he said, “so we’ll just wait and see.”
Produced by
Washington and Lee
journalism students.
Lead Supervisors:
Prof. Brian
Richardson
Prof. Indira Somani
Editing supervisor:
Prof. Lisa Tracy
Technical supervisor: Michael Todd