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Why does the business cycle affect output and employment in durable goods industries more severely than in industries producing non-durables?

Business Dec 23, 2020

Why does the business cycle affect output and employment in durable goods industries more severely than in industries producing non-durables?

Expert Solution

As economic growth shrinks or contracts, the cyclical change causes employees to be laid off from their jobs until things pick up again. Those employees will continue to need non-durable goods such as food, clothing, and medical services. But they will likely cut back on durable goods purchases. Buying new furniture or a new vehicle would be examples. In a downturn of the business cycle, they will continue to pay for food, clothing, and shelter, but they will not buy a new living room set or a new refrigerator or a new car unless it's absolutely essential. They will more likely fix what they have or do without.

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