The release of the GDP numbers this week got thinking about where nominal spending is on a per capita basis. Is it doing any better or worse than the below trend growth in aggregate nominal spending? To answer this question I took final sales to domestic purchasers and divided it by population to get domestic demand per capita. Here is what I found:
Unlike the aggregate version of domestic demand, this per capita version shows that domestic nominal spending has yet to return to its peak value.* It is now only at its 2007:Q2 value. In other words, nominal spending per person in the United States has been slower to recover than its aggregate counterpart. One explanation for the depressed spending levels is that there is still an excess money demand problem.
* If one looks at aggregate demand per capita (as measured by final sales of domestic produc divided by population), you get a similar result. However, it makes less sense to do aggregate demand per capita because it includes foreigners’ spending on U.S. domestic product.