And there you have it, PCE or Personal Consumption Expenditures, have increased, a sure sign that the economy is back in good hands. Leading the way was healthcare at over $200 billion. As expected number two was housing and utilities with about $125 billion spent. Number three was that aggregate of financial services and insurance, $110 billion. And number four was recreational goods, vehicles, and other, although what other is I don’t know, but we spent about the same as number three. Of course for those of you who work in fast food and restaurants we spend a negative $3 billion, or to put it a happier way, we spent $3 billion less this quarter than we did last quarter. I imagine it was the healthier eating encouraged by our higher medical bills.
What is interesting is that we spent almost $8 billion on gasoline and other energy goods and almost $7 billion on motor vehicles and parts. Those two categories account for only 7% of the money we spent on healthcare. I find that strange, to say the least. Healthcare spend per capita amounts to about $64,000. I could be wrong, you do the math, I may be off a dollar or two or even twenty. Now I don’t know about you but I didn’t spend more that $1800 last year and that includes the $100 a month Medicare takes out of my check. So some of you out there picked up $62,200 of my per capita share. Thank you, I appreciate your generosity. On the other hand, our per capita spending on vehicles and parts was a little over twenty one dollars, less that the charge for an oil change. Perhaps we should have taken our mother’s advice and stayed in school, we could have become doctors or nurses. Oh, but the average family practice doctor only makes about $95,000 a year before expenses. Go to the yellow pages and count the number of family practitioners in your city and look at the population for your city. Every one of you paying that $64,000 into healthcare certainly aren’t paying it all to him. I mean, count up all the doctors listed and see if they account for even a quarter of that total healthcare spending in your city or suburb. Where does all that money go? And if $64,000 isn’t coming out of your pocket, whose pocket is it coming out of? Where did all this healthcare spending go and who paid? Well, there are a number of welfare programs and we know that medicaid covers a large number of people through taxpayer spending. What other taxpayer transfers are occurring in healthcare?
So if you are working in healthcare the economy is recovering and if you don’t, too bad for you. Look on the bright side, you can now afford that Mexican vacation as the Peso is tumbling like an acrobat this morning. That means you, young American party-hardy type will become more valuable to the professional and non-professional kidnappers. I hear the pickpockets in the Louvre are eagerly awaiting the American tourist season. They were bad enough last year that the guards in the various museums wanted more police stationed in them, they didn’t feel safe, and that’s no joke. The joke is the measurements often touted by economists, politicians, and the press. The University of Michigan Sentiment Index is now at the high 98.1 and climbing towards the highest since the 1995-1999 period when it reaches 110. The percentage of the population employed had reached almost 65% during that time period but now is only 59.2, up from the average of 58.5 for the 2010 – 2014 time period. Does a measure measure what it purports to measure? Well, it certainly measures the idiocy of the academics in the University of Michigan.
What I find so interesting is that the media, of which there are several components and depending on your political affiliation tend to slant the economic news is ways that please your ignorance, is so willing to tell half truths and lies, all in the name of professional journalism. Bloomberg, the beacon of liberal business ideology, I mean, really, is exalting the return of the consumer because PCI has increased. Yet it is not retail that has been the beneficiary on the consumer’s dollar. Simply go and read the article and there is no breakdown of PCI. This is the problem with aggregate accounting, you have no real understanding where the money comes from or goes, just that there is a flow of money. But then we are used to living with lies. The federal government debt was reduced not because it spend less that it took in but because it increased its inter-government agency borrowing, meaning that it took the SSI taxes and spent them while placing IOUs in the Social Security general accounts. We have that in our own lives. Every month I get those checks from my credit card account that I can use to consolidate all my other debts into one account. If I use them will I have reduced my debts or merely transfers debt from one account to another?
This is how an economy actually works. The production of goods and services create employment. Employment creates demand for goods and services. It is a circular process. No demand for goods and services, no jobs. No jobs, no demand for goods and services. It is a zero sum game. The problem comes when the total game is divided up into various zones that assume some goods and services are freebies and can be sold as profit, that is, theft from one economy for sale in another. As long as we can steal from the undeveloped countries we increase our own wealth. The fact is, it may take thousands of years before it all falls apart. Once the game becomes standard for all economies and is linked in that way, the theft becomes harder to accomplish. In the past we stole goods and services from China and southeast Asia and now they steal jobs from us, sounds fair. What has happened? Our once separate economies have merged. And when we place many categories into a general category and then claim success, what have we done? We have failed to account accurately for increase and decrease. In the first case it is the sin of omission, in the second it is the sin of commission. Both are frauds.