The new priorities of the post-pandemic economy
Since the outbreak of the pandemic, household consumption has grown by an average of 2.0% annually in real terms, almost in line with its historical rate and the growth of the overall economy. The consumption of durable goods, in contrast, has grown at double that rate: 4.0% annually.
Economic activity fluctuates throughout the cycle, but its components do not do so with the same intensity. Some aspects, such as the consumption of essential goods, tend to be relatively stable. Others are much more sensitive to economic conditions, whether due to their high cost or because their benefits materialise over time and depend on the future state of the economy. This is the case with investment and the consumption of durable goods: they are usually the first to recover when the outlook improves and the ones that advance the most when the expansion is consolidated.
Today, despite the challenging international context and the energy shock, both of these variables clearly indicate that the Spanish economy remains in an expansionary phase. In the second quarter, gross fixed capital formation grew by 1.4% quarter-on-quarter in real terms, and spending on durable goods increased by 1.6%; in both cases, more than double the rate of GDP. However, the factors driving them differ from those of previous expansionary cycles. The pandemic and technological change have left a clear mark on both investment and consumption.
Since the outbreak of the pandemic, household consumption has grown by an average of 2.0% annually in real terms, almost in line with its historical rate and the growth of the overall economy. The consumption of durable goods, in contrast, has grown at double that rate: 4.0% annually. The National Statistics Institute’s recent update of the non-financial accounts allows us to identify which factors are driving this dynamism. In the post-pandemic expansion, durable goods related to leisure, such as caravans and motorhomes, camping equipment and home gym equipment, have taken centre stage. Spending on these products has grown by an average of 21.1% annually, nearly four times the historical average. The increased spending on leisure is also evident in the rapid growth of recreational services – such as gyms and amusement parks – as well as cultural services – cinema, theatre and concerts – and accommodation services – hotels and campsites. In real terms, these items have grown by an average of 10.3%, 16.1% and 23.4% annually, respectively.
Technology is another distinctive feature of household spending decisions in this cycle. Spending on computer and communications equipment has continued to grow at a high rate of 12.4% annually, which is very close to its historical average. In contrast, spending on household tools and appliances has lost the prominence it had in previous cycles and has remained practically stagnant.
Another distinctive feature of the current expansion is the trend in non-durable goods consumption, which has fallen by 5.0% in real terms since the outbreak of the pandemic. This is an unusual pattern: while this component typically shows limited movement, it tends to grow during periods of prosperity. This time, the rising cost of various products, especially food, has led households to reduce the quantities they consume. Since 2019, fruit consumption has fallen by 16.8%, bread by 10.6%, meat by 6.2%, and fish by 8.2%. This has been partially offset by higher spending in bars and restaurants. However, it should also be noted that these declines are occurring in a context of population growth. Nevertheless, the rise in prices has led to an increase in both nominal spending on food and the proportion of household budgets that is allocated to non-durable goods.
Leisure and technology also stand out when analysing investment in the post-pandemic expansionary cycle. Information and communications, along with arts, recreation and entertainment activities, and general government are the sectors that have experienced the biggest investment boom, with average annual growth rates of 5% or more. Looking at investment by category across the economy as a whole, investment in intellectual property stands out, having grown by an average of 6.8% annually since 2020, 1 point above its historical average. Within this category, investment in software and databases has increased by 7.2% annually. This dynamism contrasts with the weaker momentum shown by investment in housing and in transport equipment throughout the cycle, although both components have recently gained traction.
The result is an expansion that has now consolidated, but is being driven by different elements compared to previous cycles, reflecting the new priorities that have emerged in recent years. At the same time, the decline in food consumption highlights that the improvement of the overall economy coexists with significant pressures on many household budgets. The expansion is robust, but its benefits are not being felt equally.
