Durable Goods and What They Say About the Economy

In order to assess the state of the economy, analysts often examine how many long-lasting goods are being ordered by retailers and manufacturers. The idea is that companies who are confident enough to stock up on durable goods like appliances and cars are anticipating a consumer base that’s eager to purchase them. This video looks at the durable goods indicator and explains how investors often look beyond it to get a better sense of where the economy is headed.

Questions:

1. What is the durable goods indicator, and why do financial analysts keep a close watch on it?
2. Why do some analysts exclude items like aircraft when examining the durable goods indicator?