Sunday, January 4, 2015

On Gettin' Older

1 comment:

  1. Most household spending is not on durable goods but on services. Moreover, drivers of growth in consumer spending include those sectors servicing senior citizens, such as drugs, nursing homes, and hospitals.

    The Bureau of Economic Analysis reports Americans spent $11.5 billion in 2013. Of that, just 11% was on durable goods - the kind that last. Household appliances, utensils, tableware, and glassware combined accounted for less than 1% of spending.

    Non-durable goods accounted for 23% of spending. Non-durables consist primarily of food, clothing, and fuel. The next largest sub-category of non-durables is medical products (eg. pharmaceuticals).

    Services accounted for 66% of spending. Housing and utilities is the largest sub-category, accounting for 18% of total spending, followed by healthcare services, accounting for 17% of total spending.

    Over the past five years, spending grew by 15%. Spending on durable goods grew 13%, with spending on household appliances, utensils, etc. growing 8%.

    Spending on nondurable goods grew 14%, with spending on medical products growing 27%.

    Spending on services grew 15%, with spending on healthcare services growing 23%.

    Slack consumer demand in the first world isn't related to aging so much as it is to weak household financials.