A 'consumer durable' recession is taking shape as Americans slash big-ticket purchases

Americans are pulling back from big-ticket purchases at a pace not seen in decades.

Spending on long-lasting goods such as vehicles, homes, and major appliances has fallen off a cliff, with every major component of buying intentions now near multi-decade lows.

According to the University of Michigan’s latest Consumer Sentiment Survey, all three categories have deteriorated since 2021, reflecting a historic decline in consumers’ perceptions of affordability.

Homebuying conditions are the weakest amid high mortgage rates and record prices.

Vehicle demand remains subdued as car costs and financing rates weigh on buyers. Large household durables — furniture, appliances, and other goods — plunged again in October, signaling renewed strain on discretionary spending.

“Conditions for household goods [are] deteriorating sharply,” wrote Liz Ann Sonders, chief investment strategist at Charles Schwab.

While sentiment doesn’t always translate directly into purchases, durable goods typically require financing and long-term income confidence, making these readings an early warning of softer spending, weaker manufacturing, and broader economic cooling.

The breakdown underscores a two-speed economy.

Higher-income Americans remain relatively insulated, while lower- and middle-income Americans bear the brunt of high prices and borrowing costs.

The economy’s conflicting signals

Personal Consumption Expenditures (PCE) account for about two-thirds of total U.S. GDP, and within that category, durable goods make up roughly 15% to 17% of consumer spending.

That represents a sizable share of the economy now potentially under pressure as buying intentions for big-ticket items remain deeply depressed.

At first glance, the broader economy looks strong. U.S. GDP expanded at a 3.8% annual rate in the second quarter, and early estimates from the Atlanta Fed’s GDPNow tracker suggest a similar pace of growth in the third quarter.

However, beneath the surface, other indicators tell a more complicated story. Labor market data show that not all Americans are benefiting from headline growth, with unemployment edging higher and the number of job seekers outpacing available positions.

As InvestorsObserver recently reported, the widening gap between GDP growth and employment may stem partly from artificial intelligence adoption, as businesses use automation to boost efficiency.

A sharp slowdown in immigration under President Trump’s administration may also be contributing to the imbalance.

The picture appears to be worsening. According to Apollo Global Management data comparing the U.S. quits rate and hiring rate, hiring has plunged to recessionary levels, mirroring the sharp collapse seen during the 2020 pandemic downturn.