Interesting look at our spending habits.
Consumers are still increasing their spending, though at a slower clip.
But underneath the hood, a necessary rotation is underway: The economy is exiting a pandemic-era phase where consumers spent big on goods and less on services.
Why it matters: The rotation is a welcome development — though it’s caught businesses off-guard. Retailers had been stocking up on inventory to meet a level of demand that hasn’t materialized.
Details: Goods consumption pulled down overall growth by over 1 percentage point. Services spending, however, added 1.8 percentage points.
Adjusted for inflation, spending on health care and restaurants rose double digits from the prior quarter.
On the goods side, spending on recreational goods and vehicles — a category that includes sporting equipment, for one — dropped 10% from the first three months of the year.Axios Macro By Neil Irwin and Courtenay Brown · Jul 28, 2022