Tuesday, November 23, 2010

Consumer Spending Is Back to Pre-Recession Level

From Table 8 in today's BEA report: Real personal consumer expenditures reached $9.34 trillion in the third quarter, the highest amount of quarterly spending since the slightly higher $9.342 trillion in the fourth quarter of 2007 when the recession started (see top chart).

On a percentage basis, real personal consumption expenditures grew by 2% in the third quarter compared to the same quarter last year, and this was the largest quarterly increase in consumer spending in three years going back to the third quarter of 2007 - the quarter before the recession started (see bottom chart). 


At 11/23/2010 5:08 PM, Blogger VangelV said...

Why is this positive news? Consumers are broke and should be saving for retirement, not going into more debt by spending money that they do not have to buy depreciating assets and consumption goods.

At 11/23/2010 6:23 PM, Blogger morganovich said...

this is subject to all the same CPI arguments as the corporate profits issue.

if CPI is understating the price level, then we could still be 10-15% off the high in real terms.

do you really feel like people are buying as much stuff as they were in 2007?

that certainly seems anecdotal questionable to me, which, granted, is not a terribly scientific viewpoint, but it's odd to hear that spending is back at the highs and see so little evidence of it, particularly with unemployment still so high.

At 11/23/2010 6:25 PM, Blogger morganovich said...


i agree with you. we seem to have entered a cult of "growth is everything".

huge deficits, debt, and negligible savings are all seen as unimportant peripheral issues so long as we keep buying stuff.

it's a very dangerous philosophy in the long run.

At 11/23/2010 6:53 PM, Blogger rjs said...

inflation adjusted?



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