Economics studies what is produced, how, and for whom, but always under the assumption that the desire to consume goods and services motivates work and trade. Real, per capita consumption is often the most informative consumption measure because it adjusts for inflation and population growth. Total nominal consumption would tend to rise as the price level or population rises, even if individuals aren’t consuming more.

The FRED graph above shows that real, per capita consumption and each of its components—durable goods, nondurable goods, and services— have risen consistently over the long run, except for short retrenchments during recessions. It shows that average American consumption is more than 4.5 times as great at the end of 2023 than in 1950.*

In addition to these long-run trends and retrenchments during recessions, the first graph shows that consumption was unusually volatile during the COVID-19 pandemic. Total consumption and service consumption declined substantially, but there were seemingly less-pronounced movements in consumption of durable and nondurable goods. Unfortunately, the differences in scale among the four measures of consumption make it difficult to see relative changes in consumption expenditures.

The second FRED graph helps us see relative changes in real expenditures in these three components of consumption, which are normalized by dividing each by total consumption. There’s a definite decline in the share of nondurable goods consumption over the whole sample, as well as a large increase in the share of durable goods consumption. The share of service consumption is more complex: It rises from the 1940s to the early 1990s and then declines. Service consumption is also unusual in that the share of service consumption has often risen during recessions.

Consumption patterns change according to consumer preferences, technology, income changes, and credit availability. Chien (2015) shows that using nominal shares of service consumption, rather than real service consumption, indicates a fairly pronounced and steady rise in service consumption. In other words, a rise in the relative price of services drove much of the rise in service consumption. The reason service prices rose relative to nondurables or (especially) durables is that productivity increases were faster for manufactured goods (durables and nondurables) than for services. That is, technological advances improved our ability to make televisions, computers, and cars much more than they improved our ability to provide medical exams, give college lectures, or babysit children.

Finally, to better see the behavior of relative consumption around the COVID recession of 2020, our last FRED graph illustrates real, per capita expenditures from the first quarter of 2019 through the first quarter of 2021, with each series normalized to take the value 100 in the first quarter of 2020. During this episode, service consumption declined substantially, while consumption of nondurables declined modestly, and consumption of durables stayed steady. It’s easy to understand that consumers’ desires to avoid services (i.e., human contact for restaurant meals or massages) would reduce service consumption during COVID. If people aren’t going out, they might also postpone purchases of some nondurables, such as clothing and footwear. Finally, people stuck at home will still want entertainment, so purchases of computers, televisions, and durable exercise equipment remained fairly steady.

*Examples of durable goods are vehicles, furniture, computers, and software. Some non-durables are paper and plastic products, clothing, footwear, and food. Services include entertainment, healthcare, auto repairs, landscaping, and babysitting.

How these graphs were created:
First graph: Search FRED for and select “Real personal consumption expenditures per capita.” From the “Edit Graph” panel, open the “Add Line” tab to search for and select “Real personal consumption expenditures per capita: Goods: Nondurable goods.” Repeat for “Real personal consumption expenditures per capita: Goods: Durable goods” and “Real personal consumption expenditures per capita: Services.”
Second graph: From the first graph, use the “Edit Graph” panel’s “Edit line 2”: Under “Customize data” search for and select “Real personal consumption expenditures per capita” and apply formula a/b. Repeat for lines 3 and 4. Finally, click on “Edit line 1” and delete it.
Third graph: Start from the first. From the “Edit Graph” panel and then “Edit line 2,” select “Index (Scale value to 100 for chosen date or recession)” In the “units” box and select “US recession” with “2020-02-01 Start.” Select “Copy to all” to the right of the units selection. Click on “Edit line 1” and delete it. Above the graph, select “2019-01-01” and “2021-01-01″ as the sample dates.

Suggested by Christopher Neely.