The always-worth-reading David Leonhardt posited that consumer spending was undergoing a large, negative, structural shift. I said, hmmm, not so sure—you don’t see it in consumption as a share of GDP, though you do see sharply diminished housing investment.
David Leonhardt responds to my response by saying that as far as he’s concerned, spending by consumers is consumer spending, whether it’s on a house or a tank of gas. So he combines the two graphs from my original post into one. If you do that, you definitely get a sharp decline in this hybrid consumption+investment measure as a share of GDP.
I agree that buying a house is a big expenditure and my original point was that if you’re looking for structural change—a lasting change in shares of the economy—that’s where you’ll find it: residential investment has been and will be depressed for awhile.
So David L and I agree. But I lose my GDP account nerd privileges if I combine consumption and investment that way. And there is some substance to this distinction. To economists, stuff you buy that lasts a long time, like a house, is an investment. Stuff that doesn’t, like a slice of pizza, isn’t (umm…pizzzza).
The fact that consumers—i.e., people—buy both doesn’t change that distinction.