All That Former U.S. Retail Spending Didn’t Just Go To Amazon

By Justin Fox
Bloomberg

Retail is in trouble. Sales declined for the second month in a row in the U.S. in March, and there’s talk that perhaps traditional retail has passed a tipping point, with lots of store closings, layoffs and bankruptcies to come.

One obvious reason for retailers’ difficulties is the rise of Amazon.com Inc. and other establishments that the Census Bureau classifies as “nonstore retailers.”

There have been even bigger shifts over the decades, though, in what we spend our money on, according to the personal consumption expenditures database maintained by the Bureau of Economic Analysis. Increasingly, it’s not tangible stuff that you buy in a store or order online, but services.Healthcare is by far the biggest contributor to this move from goods to services – spending on healthcare services has gone from 3 percent of personal consumption expenditures in 1929 to 17.2 percent last year. Spending on pharmaceuticals made up another 3.8 percent of personal consumption in 2015. (Government spending data for narrower categories isn’t available for 2016 yet.)

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