Here’s something I sure didn’t know, from Business Week’s Michael Mandel:
What the government calls “personal consumption” is actually a grab bag of items, some of which don’t really fit the usual notion of consumer spending. For example, the nation’s current annual personal consumption of $10 trillion includes about $1.8 trillion in outlays by Medicare, Medicaid, and private health insurance providers. This is real money, but consumers don’t control or even see most of it, since it usually goes right to the health-care provider.
The government’s count of personal consumption also includes “imputed” categories, that is, entries that don’t involve any money changing hands. Two of the biggest examples: $1.1 trillion for “rent” that homeowners theoretically pay to themselves to live in their own homes, and $240 billion for “services furnished without payment by financial intermediaries”—in other words, the value of services like no-fee checking accounts.
In fact, once medical outlays and those two imputed categories are set aside, it turns out that the rest of personal spending has actually fallen since November, adjusted for inflation. The decline is pretty much across the board: inflation-adjusted purchases of food, clothing, furniture, and motor vehicles are all down. The part of health-care spending that individuals control most directly—prescription drugs—is down as well.