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Posted by: Michael Mandel on May 01
According to the BEA’s latest report, real personal consumption grew at a 1% rate in the first quarter. But once I take out the parts of PCE which don’t actually come directly from consumer pockets, the rest of real PCE actually shrunk at an 0.1% rate. The chart is here:
You can see the down bar on the far right.
This calculation updates the one I did for the “Consumer Spending Mirage” (which Brad DeLong was kind enough to highlight here). See also the BEA’s defense of imputations, which I assume was a response to my story.
To get these figures, I remove owner-occupied housing, unpaid financial services, and 85% of medical care from consumer spending. Owner-occupied housing and unpaid financial services are imputations, which means they don’t directly correspond to cash expenditures. And roughly 85% of medical care spending flows through Medicare, Medicaid, and health insurance companies, so once again not out of pocket.
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.