Do we buy too much stuff?
Macro
Tracking Qty of RPCE relative to Real per capita DPI
How much “stuff” we are consuming relative to the average person’s inflation adjusted take home pay?
\[ \frac{\text{Qty of Real PCE}} {\text{(Real DPI/population)}}\]
- Real PCE: inflation adjusted consumption
- Qty: Quantity index of the consumption basket
- Real DPI: inflation adjusted disposable income
- Population: resident population plus armed forces overseas
As this fraction rises it suggests that the quantity of consumption is rising relative to real disposable income per capita; i.e. we’re buying more stuff relative to what we earn.
This is a Qty measure, not a dollar nor price measure; i.e. we’re buying more stuff, not more expensive stuff.
I’ve indexed this ratio to 1929=100 for purchases of Durable Goods, Non Durable Goods, and Services.
Takeaway: We love our durable goods. Up 1,023% since 1929 vs 187% for Services and 55.9% for Non Durable Goods.