America's Waning Stock of Durable Goods

Moneybox
A blog about business and economics.
Dec. 28 2012 12:37 PM

America's Waning Stock of Durable Goods

1356716276190

Neat chart from Barry Ritholtz shows that America's cars and appliances are getting old as households slow the replacement/upgrade cycle of durable goods in response to the bad economic situation. He calls this "a potentially bullish data point" on the grounds that "all of this stuff eventually has to get replaced."

That's about right. But it's also a reminder that waiting for a "natural" economic recovery rather than relying on "artificial" stimulus in the form of fiscal or monetary policy is really just a slow motion version of creating economic growth via the broken windows fallacy. If five percent of America's cars, fridges, toasters, washing machines, and blenders vanished suddenly tomorrow that would be "good for the economy" in the sense that boosting orders for consumer durable goods would lead to a higher GDP growth rate. But the purpose of having an economy is to make people better off, and you clearly don't make people better off by destroying their appliances.  

Advertisement

By the same token, even a steep recession will generally come to an end sooner or later. Cars and trucks and buildings and appliances will get old and need to be replaced, in effect raising the "natural rate of interest" and bringing intended savings and desired investment into equilibrium. But this happens by impoverishing the country, just as much as running around smashing windows would.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

The Irritating Confidante

John Dickerson on Ben Bradlee’s fascinating relationship with John F. Kennedy.

My Father Invented Social Networking at a Girls’ Reform School in the 1930s

Renée Zellweger’s New Face Is Too Real

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

The All The President’s Men Scene That Captured Ben Bradlee

Culturebox

The Simpsons World App Is Finally Here

I feel like a kid in some kind of store.

Technology

Driving in Circles

The autonomous Google car may never actually happen.

The Difference Between Being a Hero and an Altruist

How Punctual Are Germans?

  News & Politics
Politics
Oct. 22 2014 12:44 AM We Need More Ben Bradlees His relationship with John F. Kennedy shows what’s missing from today’s Washington journalism.
  Business
Moneybox
Oct. 21 2014 5:57 PM Soda and Fries Have Lost Their Charm for Both Consumers and Investors
  Life
Quora
Oct. 22 2014 9:51 AM What Was It Like to Work at NASA During the Challenger and Columbia Disasters?
  Double X
The XX Factor
Oct. 22 2014 10:00 AM On the Internet, Men Are Called Names. Women Are Stalked and Sexually Harassed.
  Slate Plus
Working
Oct. 22 2014 6:00 AM Why It’s OK to Ask People What They Do David Plotz talks to two junior staffers about the lessons of Working.
  Arts
Culturebox
Oct. 22 2014 9:54 AM The Simpsons World App Is Finally Here I feel like a kid in some kind of store.
  Technology
Future Tense
Oct. 22 2014 8:43 AM Thunderstruck: Rock Out With Mother Nature’s Evil Side
  Health & Science
Wild Things
Oct. 22 2014 9:39 AM Gertjie and Lammie, a Magical (and Bizarre) Friendship
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.