Study: Big-ticket sales continue to tumble
April 28, 2008

New York—Sales of big-ticket items, including appliances, cars, electronics and furniture, are expected to be permanent their downward spiral as the Deloitte Leading Index of Consumer Durables Spending fell for the sixth straight month in March.

The Index, which earliest turned negative in September 2007, suggests that personal-consumption expenditure on durable goods (manufactured goods designed to utmost at least three years) is on a sustained downward trend.

This continuous drop in durable-goods orders generally serves as a reflection of the overall economy, which has been strangled by a severe housing slump and a persisting credit crunch, according to analysts.

“In today’s changing environment, one deed is certain: Product manufacturers who offer consumers the most good designed, most reliable and most trustworthy products will win the day,” Deloitte’s U.S. Consumer Products Leader Pat Conroy said in a media release issued on Monday. “Deloitte research shows that consumers are increasingly turning to friends, families and third parties by reason of their input before making purchases.”

The Index is composed of four components: Consumer Price Index, initial unemployment claims, real wages and new homes sold.

—Consumer Price Index (for urban consumers): This captures the negative effect of rising prices on nominal spending on durables.

—Initial claims for unemployment insurance: This captures the effect of the labor market. A rise in unemployment insurance claims leads to a decline in spending without interruption durables.

—Real hourly earnings: This captures the positive efficiency of rising income forward willingness to spend on durables.

—New single family houses sold: This captures the positive effect of the housing market on durables spending, with a six-month lag.

For more information about Deloitte’s Consumer Products group, visit its Web position, Deloitte.com/us/consumerproducts.