This is one of the most interesting graphs I’ve ever seen. Remember the consumptionholic lifestyle Americans were living? Sure there were overextensions: too much car purchasing, too much pool building, too much Best Buy credit carding, etc.
But look at that graph; it seems a significant portion of that “binge spending” can be attributed to healthcare. Left Business Observer:
Some numbers to make these points: at the end of 1978, consumption was 61.5% of GDP; in the second quarter of 2008, it had risen to 70.3%, or 8.8 points. Well over half that increase, 5.0 points, came from spending on medical care. The share of GDP devoted to spending on goods actually fell by 4.7 points over that 30-year period.
The pattern is preserved if you start the clock in 1997, just as the stock and housing manias were taking off. Medical spending accounted for almost a third of that rise between 1997 and 2008. Energy accounted for another third. Spending on goods accounted for just 3% of the rise, or 0.1 point. In other words, the familiar story that Americans went hogwild buying all kinds of stuff is wrong.