Tuesday, July 19, 2011

Update: The Tchotchke Index

"We're Spent," was the title of an article in last Sunday's New York Times. In the article, David Leonhardt describes the prolonged fizzling of the great consumer bubble. "We are feeling the deferred pain from 25 years of excess," he says, concluding: "The old consumer economy is gone, and it's not coming back."  

Two years ago, I created the Tchotchke Index to track excess consumer spending (see article), a measure of the economic wellbeing of American households. The Tchotchke Index is the amount of money spent by the average household on "decorative items for the home," one of the detailed categories of household expenditures examined by the government's Consumer Expenditure Survey. Decorative items for the home are all the trinkets Americans buy when they are feeling flush.

The Tchotchke index peaked in 2000, when the average household spent $221 (in 2009 dollars) on decorative items for the home. Spending plunged during the recession of the early 2000s, falling to $148 by 2003. Tchotchke spending then bobbled, rising above the $200 level in 2005, falling to $146 in 2006, and rising to $160 in 2007 as households tried to figure out whether they were in the money or not. Turns out they were not. The Tchotchke Index fell to a modern-day low of $126 in 2008, and in 2009 (the latest data available) was little changed, with the average household spending just $129 on decorative items for the home. Since 2000, the Tchotchke Index has fallen by 42 percent.

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