Mike Mandel points out some interesting statistics from the Bureau of Economic Analysis. Rather than declining as you might surmise from all of the tens of billions of bits and thousands of gallons of ink expended on the reporting on the economy over the last several years, personal consumption has risen:
Since the recession started in the fourth quarter of 2007, the common theme has been about Americans cutting back on their spending. But the latest numbers from the BEA show aggregate personal consumption expenditures are up 2.9%, or $285 billion. So we must be spending more on something!
He continues by showing a couple of tables, one of areas in which spending has increased, one of areas in which spending has decreased. The hands-down winner in the increased spending category is healthcare. We’re spending nearly $200 billion more today on healthcare than we did in 2007.
There’s no single big loser in the declining spending area but motor vehicles and gasoline have lost $120 billion in sales between them.
Note that there’s a direct relationship between slowing growth in employment and increasing expenditures on healthcare. As I’ve pointed out before although the healthcare sector accounts for about a sixth of the total economy it employs fewer than a sixth of the workers. That means that other sectors produce more jobs per dollar than healthcare does. That’s mathematics not a value judgment.
The increase in personal consumption does raise a question. If personal consumption has risen and government consumption has risen and aggregate demand has fallen, doesn’t that mean that the fall has mostly been in business consumption? And haven’t you heard that somewhere before?