2 years in a row Quarterly decline in gross domestic product In part, it was made possible by the level of anemia in personal consumption.
KPMG’s Chief Economist, Dian Swonk, said:
Private consumption increased by 0.3%, or 1% on an annual basis. This is the percentage that Squonk called “crawl.” Over the last three quarters, growth has averaged 2.1% on an annualized basis.
The numbers are adjusted for both seasonal factors and inflation.
Economists are looking for a recovery in service spending to offset the inevitable decline in commodity spending as consumer patterns gradually reset from the pandemic. This happened in the second quarter, with service spending rising 4.1% on an annual basis, but not enough to prevent a significant slowdown.
“We believed that the pivot was enough to keep us all in good shape, and the reality is that inflation is so high that it’s not enough,” Swonk said.
But from the perspective of fighting inflation, it may be a welcome trend.
Supply chain bottlenecks combined with surges in demand caused prices for goods such as cars and furniture to skyrocket as Americans bought things for money they couldn’t spend on travel and other services during the pandemic. .. Declining demand is important to keep these prices down and makes the Federal Reserve work somewhat easier.
Digging into the table reveals an interesting dichotomy. The largest increase in service spending was due to meals in the form of hotels and restaurants, adding 0.6 percentage points to annual GDP. The biggest reduction in spending was also due to foods intended to be eaten at home and foods in the form of meals, subtracting 0.65 percentage points from growth.
Healthcare spending has also increased, adding 0.4 percentage points to annual economic growth.
Ben Casselman Contribution report.
