Why I Am at Best Ambivalent About Stories That Place Consumption Spending Declines at the Heart of Our Current Cyclical Relative Stagnation

Graph Real Personal Consumption Expenditures FRED St Louis Fed

Consumption spending has fallen less relative to potential GDP than has GDP as a whole: the sectors that have fallen more than proportionately relative to potential are construction and government purchases–not household consumption spending.

Household consumption spending has fallen, but not more than the average component of GDP:

Graph Real Personal Consumption Expenditures FRED St Louis Fed

May 17, 2014

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