I want to highlight the post by Nick Bunker yesterday over at Equitable Growth Value Added on the shape of the GDP growth number. Our 4%/year first-quarter real GDP growth rate was only a 2.3%/year growth rate for demand–the rest was inventories. And our (still anemic) growth in consumption continues to be largely growth in durables consumption. Well worth your reading, if you haven’t already:

Nick Bunker: The durability of consumption and economic growth: “The Bureau of Economic Analysis…

estimates [real] GDP grew by 4 percent on an annualized basis during the second quarter of 2014…. [This] is the first of three estimates… and is subject to revisions…. The largest contributor… gross private domestic investment… added 2.57 percentage points… [with] 1.66 percentage points of that contribution was an increase in private inventories…. Government… [purchases] added 0.30 percentage points…. Net export… were a drag… subtracting 0.61 percentage points…. Personal consumption expenditures added 1.69 percentage points to the total growth rate… [with] durable goods… at 0.99 percentage points….

[Since] the end of the Great Recession… inflation-adjustment amount of durable goods consumption increased 26.6 percent. For nondurable goods, it only increased by 5.5 percent and for services 5.1 percent…. Atif Mian and Amir Sufi point out… consumption of nondurable goods and services have been historically weak during this recovery…

Let’s look at consumption as a whole:

Graph Personal Consumption Expenditures Durable Goods FRED St Louis Fed

Consumption of durables:

Graph Personal Consumption Expenditures Durable Goods FRED St Louis Fed

And consumption of services:

Graph Personal Consumption Expenditures Durable Goods FRED St Louis Fed

The other way to frame the consumption data is, of course, to say that right now consumption of services is 1% below the share of potential GDP it attained at the last business cycle peak and that consumption of durable goods is 20% below the share of potential GDP it attained at the last business cycle peak. Yes, consumption of durable goods is growing much more rapidly than consumption of services. But might this not be a statement about the shape of the downturn, and Mike the right judgment on it be that our system of financing consumer durables purchases and still substantially broken?

Yet another thing I ought to have a stronger and more confidently-informed view of than I do…