Section I documents the moderate pace of the recovery in general and of durable goods
spending in particular.
This is the same sort of commitment problem first noted by Coase  for durable goods
Equation (5) indicates the direct relationship between the current rental rate and the return on the investment in durable goods
. Because new durable goods
are more expensive than used, the non-negative sign follows.
When analyzed by industry group, the data show that factory output decreased 0.5 percent in October after a 0.3 percent gain in September; the production of durable goods
dropped 0.7 percent, while that of nondurable goods slipped 0.2 percent.
The output of other durable consumer goods declined noticeably for the third consecutive month, putting it more than 4 percent below its June level and more than 1 percent below its year-ago level; the weakness in September was concentrated in household furniture, refrigerators, and miscellaneous durable goods
. In contrast to the lowered output of consumer durables in September, the production of consumer nondurables rose 0.5 percent, led by gains in the production of foods and chemical products; electricity usage and the output of clothing and paper products also increased, but gasoline output fell.
The output of durable goods
materials rose 1.1 percent, with gains in the output of parts destined for use in consumer goods or in business and defense equipment.
The strength was evident in durable goods
materials, particularly semiconductors, computer parts, miscellaneous plastics materials, and parts used to make motor vehicles.
Among durable goods
materials, decreases in metals and in motor vehicle parts and related equipment were offset by further strong gains among electronics components.
The output of the durable goods
component dropped 2.1 percent, largely because of further sizable cutbacks in the production of consumer autos and trucks.
Gains in equipment parts, however, especially semiconductors and computer parts, have been robust and have accounted for much of the 0.7 percent rise in the output of durable goods
materials in July.
The production of business equipment and durable goods
materials rose sharply.
In market groups, output of consumer goods excluding motor vehicles and electricity for residential use edged up in April and May, owing mainly to gains in production of durable goods
such as appliances, carpeting, and furniture; production of most other consumer goods has changed little in recent months.