Just What Are We Buying, Anyway?

So, everybody knows are Americans are incorrigible consumers, who recklessly tap their houses for more and more cash and run up catastrophic credit card bills in order to buy plasma TVs. Right? Well, maybe not.

The first chart, from Calculated Risk, shows personal consumption expenditure (PCE) ex-health and health care spending as a percentage of GDP. Non-health expenditures have basically been constant between 56% and 59% of GDP since 1960, and has changed very little in the last decade.

The second chart shows health care spending, personal saving, and their sum since 1946. That sum has also been relatively constant since 1970. So, we weren't really using our home ATMs to pay for plasma screen TVs, we were using them to pay for hip replacements and chemotherapy.

Does it matter? I think that depends what the question is...