Hasta La Ideas

Michael Mandel, former chief economist at Business Week and current editor of Visible Economy, wrote yesterday about US consumer spending trends in a post on his website titled “Where Americans Are Spending More.” The post explains that since the recession began in 2007, personal consumption expenditures have actually increased:

Right there up at the top is America’s love affair with mobile devices, where spending has soared almost 17% since the recession started. Also supporting my thesis of a communications boom-spending on wired, wireless, and cable services have risen by 5%.

In addition, Americans still care about their pets, their children, their hair, and their guns.

Mandel’s post has a couple charts that show the actual numbers and percentage increases in spending as reported by the Bureau of Economic Analysis, so I highly recommend checking out the original article. In contrast to the areas of growth, it is interesting to note what segments of the market have experienced decreases:

Americans are spending a little bit less on clothing and hotels; a lot less on foreign travel, video and audio equipment (think televisions), and furniture. The big drop, though, has come in motor vehicles and associated goods and services, like gasoline.

During this recession, it’s not that consumers have stopped buying, it’s that they have stopped buying large, conspicuous, luxury goods, and have instead bought smaller, less flashy items. As a nation, we’re not really cutting back, we’re just giving the outward impression we are.

From a simple living perspective, I have mixed feelings about this report. I’m encouraged that the personal consumption increases seem to be on things that bring people together — communication, food, and caring for the people you love (child care, education, health care). However, it’s still an increase in spending. The media speaks incessantly about American society tightening their belts, but that is not really the case. Instead, it appears our consumer priorities have merely changed to smaller, less obvious purchases.

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