InvestNot yet confirmed elsewhere1 publisher3 min readPublished
Real spending grew 2.1%. Healthcare services took about a third of the gain.
Nominal spending ran 5.9% against 3.7% inflation. Healthcare services, now 18.2% of the wallet, are growing at twice the pace of the whole consumer economy.
The Investor · Invest desk
What happened
- Inflation-adjusted consumer spending rose 2.1% year over year in July, out-running 3.7% inflation, on BEA figures read by Wolf Street.
- Durable goods spending fell 1.4% from June and is up only 1.0% on the year.
- Wolf Richter reports the recreational goods and vehicles splurge, the largest durable category, reversed this year after peaking above 5% of total spending late last year.
Why it matters
- cost Because the growing category includes health insurance, the fastest real spending growth in the economy arrives partly as premiums, which means employers and plan members carry it as much as...
- constraint With healthcare and housing above a third of the wallet and the healthcare share still climbing, every discretionary seller is bidding for a remainder that is shrinking as a share of spending.
- decision Anyone setting recreational-durables plans off last year's comparison is planning against a peak, not a run rate, and the inventory and floor-space decisions that follow are different.
- exposure Fuel retail sits on a volume base that has been eroding since 2018 regardless of pump prices, so the relief households get there is permanent for them and permanent loss for the sellers.
The 2.1% is mostly one category doing the work. Healthcare services are 18.2% of total consumer spending and grew 4.2% in real terms [2][5]. Multiply those and healthcare alone accounts for roughly 0.76 percentage points of the 2.1-point gain, about 36% of it [27][28]. Housing and utilities, 16.2% of spending growing at 1.2%, contributed around 0.19 points, under a tenth [3][13][29][30]. Services as a bloc, 66% of spending at 2.5% real growth, cover about 1.65 points, close to four-fifths of the total [12][14][31]. Goods are along for the ride.
That is the composition story stated with arithmetic rather than adjectives: real healthcare consumption is expanding at twice the rate of the consumer economy it sits inside [25], from a base that passed housing and utilities in 2023 and has widened the gap to two percentage points of the wallet [4][24]. Combined, the two categories are over a third of everything households spend, and Wolf Richter's point is that this is where inflation bites hardest [19].
The nominal-to-real wedge is worth pinning down. Spending up 5.9% before inflation and 2.1% after implies a price increase of about 3.7% across the basket, which matches the headline inflation rate the same release is measured against [10][11][1][26]. So the volume gain is real, not a price artifact. It is just narrowly sourced.
The reversal in recreational goods and vehicles is the part the published account asserts but does not size [7]. What it does show: that category overtook motor vehicles in 2021 to become the largest durable goods line, and peaked above 5% of total consumer spending late last year [6]. Set that against durable goods' 13% share of all spending and recreational products were roughly two-fifths of the durable basket at the top [32]. Durables as a group fell 1.4% in July and are up only 1.0% on the year, the weakest of the three top-line buckets [16][15][14]. Direction fits the claim. Magnitude is not in evidence here, and this is one publisher reading one BEA print [11].
Look at the other fast line and the medical read gets stronger. "Other nondurable goods" grew 3.4% year over year, and the BEA fills that bucket mostly with pharmaceutical products and medicines alongside household supplies, personal care and pet items [17]. Real spending on food and beverages, meanwhile, was flat year over year and down 0.1% in the month [18]. Households bought no more food by volume than a year ago. Clothing and footwear rose 2.4% and financial services and insurance 2.9%, so discretionary lines are not dead [22][21], but the two fastest-growing categories in the release both trace back to medicine.
A 2.1% real gain that is a third medical describes a weaker consumer than the headline reads, and a different customer.
What to watch
- Whether August and revised BEA data put recreational goods and vehicles below their 5%-of-spending peak, and by how much.
- Whether healthcare services real growth holds above 4%, which decides how much of the aggregate gain is discretionary at all.
- Whether housing and utilities real growth accelerates off 1.2% and narrows the two-point gap with healthcare.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence68
- Adoption
- Insufficient
- Hype gap+8
- Incentives32
- Confidence61
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Inflation rose 3.7% year over year in July.
ReportedSupportedSource: Wolf Richter, Wolf Street2 sources— create a free account to open themView cited source - [2]
In July, healthcare services accounted for 18.2% of total consumer spending.
- [3]
Housing and utilities accounted for 16.2% of total consumer spending.
- [4]
Healthcare services surpassed housing and utilities three years ago, in 2023, and the gap has continued to widen.
- [5]
Inflation-adjusted spending on healthcare services rose 0.41% in the month and 4.2% year over year.
- [6]
Recreational goods and vehicles became the number one durable goods category in inflation-adjusted terms, surpassing motor vehicles in 2021, and at their peak late last year accounted for over 5% of total consumer spending.
- [7]
According to Wolf Richter, the big splurge on recreational goods and vehicles flipped this year.
ReportedSupportedSource: Wolf Richter, Wolf Street2 sources— create a free account to open themView cited source - [8]
Inflation-adjusted spending on gasoline was down 0.1% in the month and 2.5% year over year.
- [9]
US gasoline consumption, measured in million barrels per day, peaked in 2018 and has since fallen by 4.5%, as ICE vehicles got more efficient and EVs became a larger part of the fleet.
- [10]
Consumer spending in July, not adjusted for inflation, rose 5.9% year over year.
- [11]
Adjusted for inflation, consumer spending edged up in July from June and was up 2.1% year over year, according to the Bureau of Economic Analysis.
- [12]
Of total consumer spending, 66% went to services, 13% to durable goods and 21% to nondurable goods.
- [13]
Inflation-adjusted spending on housing and utilities rose 0.15% in the month and 1.2% year over year.
- [14]
Inflation-adjusted spending on services overall grew 0.29% in July from June and 2.5% year over year.
- [15]
Inflation-adjusted spending on nondurable goods dipped 0.2% in July from June and rose 1.4% year over year.
- [16]
Inflation-adjusted spending on durable goods fell 1.4% in the month and rose 1.0% year over year; the series is very volatile month to month.
- [17]
"Other nondurable goods", the biggest nondurable category, fell 0.32% in the month and rose 3.4% year over year; it is dominated by pharmaceutical products and medicines, medical products and supplies, games and toys and pet items, household supplies, personal care products, tobacco and print media.
- [18]
Inflation-adjusted spending on food and beverages fell 0.1% in the month and showed no change year over year.
- [19]
Healthcare services and housing costs combined account for over one-third of total consumer spending, and that is where inflation bites the most.
- [20]
All figures are annual rates, adjusted for inflation and expressed in 2017 dollars, with each category deflated by price changes in that specific category.
- [21]
Inflation-adjusted spending on financial services and insurance rose 0.14% in the month and 2.9% year over year.
- [22]
Inflation-adjusted spending on clothing and footwear fell 0.23% in the month and rose 2.4% year over year.
- [23]
The healthcare services category includes health insurance but excludes pharmaceutical products and other healthcare products.
- [24]
Healthcare services now lead housing and utilities by 2.0 percentage points of total consumer spending.
- [25]
Real healthcare services spending is growing at twice the rate of total real consumer spending.
- [26]
The gap between nominal and real spending growth implies a basket-wide price increase of about 3.7%.
- [27]
Healthcare services contributed roughly 0.76 percentage points of real consumer spending growth.
- [28]
That contribution is about 36% of the 2.1% total real growth.
- [29]
Housing and utilities contributed roughly 0.19 percentage points of real growth.
- [30]
Housing and utilities accounted for about 9% of total real spending growth, under a tenth.
- [31]
Services in aggregate contributed about 1.65 percentage points, close to four-fifths of total real growth.
- [32]
At its late-2025 peak, recreational goods and vehicles were roughly two-fifths of all durable goods spending.
Sources
1 independent publisher whose own reporting we read for this story.
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Topics
Entities
- Bureau of Economic AnalysisFollow
- Wolf StreetFollow
- Wolf RichterFollow
- Personal Consumption ExpendituresFollow