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Michael Mandel breaks down the change in consumer spending over the past year. While other categories declined, spending on education, health care, and recreation increased. Nick Schulz (who pointed this out to me) and I call these areas "the new commanding heights." Nobel Laureate Robert Fogel sees these as the long-term growth areas for the economy.

Mandel asks why food consumption fell. I suspect that our statistics include spending in restaurants, and that when people eat out less that shows up as a drop in food consmption. Whether people reduced calorie intake will depend on whether food they eat at home has fewer calories. I suspect that on average it does.

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CATEGORIES: Growth: Consequences

COMMENTS (3 to date)
John Thacker writes:

Another reason why food consumption fell is that one big change over the last few years has been increasing consumption of luxury food items by the middle class. People have a fair amount of room to cut back on their gourmet items while still eating the same calories.

The Cupboard Is Bare writes:

It doesn't have to do with eating less...but it has everything to do with the way you spend your food money.

And it's much more than simply cutting out restaurants, take-out, fast, frozen and processed foods.

What I'm about to suggest will seem like a lot of work, but it's something we do every week to cut costs.

Regularly shopping at a variety of stores is a great way to save significant amounts of money. Some items are cheaper at Walmart, others are cheaper at the various supermarket chains, and of course the warehouse clubs will provide good savings on many items (but not all). Last week I used coupons at BJ's and saved an additional $27 on items that I always buy there (my philosophy is that it's not a sale if you use coupons to buy things you don't like).

If I buy something as simple as yogurt when it's on sale @ 10/$4, I'll buy 30 containers for a savings of $5.70 when compared to the least expensive store. But if you were to compare it to the most expensive store, the savings would be $16.50 for the same number of yogurts.

That's a significant amount of money.

As for baked goods, you can easily spend $7.99 for a cake or a pie, but I can bake three loaves of banana bread for about $5. I don't factor in the cost of the bananas, because I use ones that have become overripe. (cooking tip -- adding extra overripe bananas to the recipe lets you use 1/3 less sugar).

At first my husband would complain that this was way too much work, but now he's getting into it. For example, one day I was in the produce section and he came over to me with two bags of peppers from the "day old" shelf that were 75% cheaper than the peppers I was about to buy. I reluctantly agreed to give them a try, only to discover that they were quite usable.

By making these and other adjustments, we have cut our food bill by a minimum of 30%, in spite of the increased cost of food, and yet we've maintained the quality of our meals, AND there's no additives, preservatives or sodium added. If need be, we could cut our costs further, but I won't give up eating organic chicken (but I have found a place that sells it for 45% less), I have my olive oil (I just buy it in bulk at BJ's), I continue to have my whole grain pasta and brown rice, and I won't eat/drink any milk or eggs unless they're pesticide, hormone, antibiotic free and the animals are grain fed.

So, fewer dollars spent on food does not mean less food is being consumed.

Dan Weber writes:

Another reason why food consumption fell is that one big change over the last few years has been increasing consumption of luxury food items by the middle class.

If I did market timing, I'd be shorting all the organic food makers, especially Whole Foods.

People hate to eat the same stuff that poor people eat, until times get tough.

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