Durable goods are a leading economic indicator because they represent large, long-lasting consumer and business purchases that are sensitive to changes in the economic environment. Durable goods are items that are expected to last at least three years, such as cars, appliances, and machinery.

An increase in durable goods orders suggests that businesses and consumers are confident in the future of the economy and are willing to make long-term investments. Conversely, a decrease in durable goods orders may indicate that businesses and consumers are more cautious about the future and are delaying investment in major purchases.

Changes in durable goods orders can also have a ripple effect on other sectors of the economy. For example, an increase in orders for machinery may lead to an increase in demand for steel and other raw materials, which can benefit the manufacturing sector. An increase in car sales can also have a positive impact on industries such as auto parts, auto financing, and auto repair.

Overall, durable goods provide valuable insights into the strength of the economy and can help economists and policymakers make informed decisions regarding monetary and fiscal policies.