In the context of economics, durable goods are, as the name suggests, items which do not quickly lose their ability to function. Alternatively known as hard goods, these are taken in contrast to consumable goods. Consumable goods last for a short period of time. Food, toiletries, paper products, and fuel are all included in this classification. Also known as soft goods or non-durable goods, consumables are not usually considered investments.
Durable goods may be classified into two categories: perfectly durable and highly durable goods. Perfectly durable goods are those which never wear out, at least in theory. Examples of these are diamonds and other jewelry items. On the other hand, highly durable goods are items which may be expected to last for about three years or so. Automobiles and electronic equipment fall under this category.
Since durable goods last for a relatively long period of time, users seldom need to purchase these. In some cases, the frequent purchase of durable goods is an indicator of the buyer’s affluence. For instance, individuals who purchase cars on a yearly basis do not necessarily have the need, but may do so as a hobby. On the other hand, a company experiencing financial difficulty may put off the purchase of new equipment even though the existing ones are already worn. As such, the rate at which such items are sold is considered an indicator of how well the economy is doing. During times of good economic health, businesses and individuals are more likely to purchase durable goods.