Wednesday, March 30, 2011

Demand diminishing between companies as durable products costs rise

Orders of durable products have fallen in the past month, which is being attributed to weaker consumer demand, among other things. Orders for durable goods, or manufactured products that last for long periods of time, rose in January, but increasing prices may have put a damper on the willingness of businesses to order such products. However, orders for transportation increased, so plane and automobile manufacturers are shipping more units.

Dropping demand not hurting transportation

Transportation has been doing really great, states AOL News. This is during a time where there has been a huge decrease in the amount of durable products being ordered. There was a 1.9 percent increase in February in vehicles and trucks orders. Orders for commercial aircraft rose by 26.7 percent. Congress isn't worried about getting new defense aircraft so those order dropped 18.4 percent. It’s the fourth time in the last five months that there was a decrease in durable goods. In fact, in February, there was a 0.6 percent decrease, including transportation.

Price goes up

The increase in gas means it costs more to drive customer goods, states CNN. Also, the rising oil and gas prices mean a rise in energy costs. Smuckers and Kraft, parent companies, elevated costs for Folgers and Maxwell House coffee. A steady increase in customer costs has been shown. The energy cost increase isn’t helping this increase. You will find non-essential products being purchased for instance the iPad 2. More than likely, consumers will spend less money on these things as food prices increase.

Costly summer likely ahead

There is no shortage of supply of gas causing the price to go up. MSNBC states that gas is increasing anyway which could hurt consumers after hurting retailers. Transportation costs affect goods, in the more it costs to get things like Huggies diapers and T-shirts to stores, the more stores have to charge for them. The cost of essential items for instance food is going up because businesses aren't purchasing durable goods and producers are raising costs. The things individuals will always buy, such as gas, coffee or bread, are the ones producers can charge more for. A huge decrease in non-essential items mean someone could get a cheap iPad. CNBC states this is only for people that have some additional money after all the price increases.

Articles cited

Daily Finance




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