Spending less, buying more

3 January 2009

Mark Thoma linked to this post from Susan Woodward and Robert Hall, in which they point out that though spending on consumption is down in dollar terms, consumption actually rose when the figure is adjusted for deflation.

Consumption of durable goods, adjusted for price declines

This is something to remember when hearing about how the recession is changing consumer behavior. Chances are it hasn’t changed much at all; we’re just buying cheaper stuff—either taking advantage of falling prices (notice any sales this holiday season?) or substituting inferior goods.

Source: Rob Hornig www.popmatters.com
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