Service Spending Taking A Big Hit

Last week, I noted that PCEs were lower during this expansion than the last two. Today, let's take a more detailed look into PCEs to see where the drop in spending is taking place.


The YOY percentage change in durable gods is strikingly strong. While some of the increase is a reaction to the negative reading during the recession, the recent readings indicate consumers are still making purchases in durables in a fairly strong way.


The YOY percentage change in non-durables spending is a bit weaker than the last two expansions, but not by much.


Spending on services is -- by far -- taking the biggest hit.

Services account for about 65% of PCEs -- meaning the drop in service spending is that much more important.