Sometimes, says Mary Walden, it sees we try to make the economy overly complex. An example: buying durable goods such as vehicles, appliances and furnishings. “I know that one thing that motivates me to purchase these products is how old my current model … is. Am I being overly simplistic?” Her husband, N.C. State University economist Mike Walden, answers.
“Not at all, Mary. You’re being very, very logical. What happened during the recession, and in fact what happens during all recessions is people do refrain from buying big-ticket items. (The) simple reason is people try to get more mileage, so to speak, out of this. So people keep their cars longer, their IT equipment longer, their furniture longer, et cetera. And because they’re not buying those things, obviously that helps slow down the economy.
“And right now when you look at the average age of many of our key household durable goods, they are near or at record highs. For example, the average age of the vehicle on the road today is 4.5 years — two years more than the 1980s. And furniture and appliances are both about a half-year older than they were five years ago, in terms of their average length of use.
“What this means … is that as the economy is recovering, and as we’re seeing jobs being created and household income beginning to move up, more households are going to, therefore, say to themselves, ‘Hey, I got to buy a new car. I need to buy more furniture, new furniture.’ And that spending is obviously going to be very helpful, not only to those stores that sell those things but to the economy overall.”