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A Surprise: What Are Americans Consuming Less of?


Here’s a question for you. What are Americans consuming less of these days?

We all know that they are buying fewer cars and SUVs. But what category of spending is the second biggest contributor to the decline in consumption? Hint: It isn’t clothing.

Answer below.

Surprisingly, reduced consumption of food is the second biggest contributor to the decline in personal consumption.

Take a look at this table. It is the change in real personal consumption, measured in billions of 2007 dollars, from January 2008 to January 2009 (based on the data released this morning).

In real terms, Americans are spending $164 billion less (in 2007 dollars) in January 2009 compared to January 2008. Out of that, $112 billion is user-operated transportation--purchases of cars and trucks, and spending on gas and oil.

But another $56 billion of decline came from food! That is to say, adjusted for inflation, real personal consumption of food fell by $56 billion. That's the second largest contributor to the decline in personal consumption. Number 3, clothing, was only $18 billion down.

In part, the fall in food consumption comes from high prices (The Law of Demand takes hold!).

But I also wonder whether the incessant public drumbeating about "fat Americans" and obesity is helping propel the decline in food consumption. The easiest way to save is to spend less on things you know you shouldn't be consuming anyhow, like too much food.

I'm going to look for other evidence of this.


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