Consumer spending: It drives the economy, but should it?
NEW YORK — No pressure or anything, but the dispensation’session health rests attached your shoulders.
The economists who know you of the same kind with “The Consumer” are worried that you’re buying not so much. Fewer cars, fewer engagement rings, fewer winter coats. Instead, you seem to be doing — finally — the sort of your mother told you to do a long time ago: putting some money into savings.
That sounds so sensible. And it is. The only problem is that consumer spending is 70 percent of the total administration. When enough people shut their wallets, the well economy shudders, as it’s doing now.
Consumer spending dropped 1 percent last month, with demand for cars falling 4.5 percent. This was the fifth month of decline in real spending, which leaves at a loss the furniture of inflation, and the steepest five-month drop since 1980, when country was battling a deep recession.
As retailers begin a rotten holiday season, the question is: Does the country’sitting dependence on consumers construction it more vulnerable than it would exist if the economy had a different engine?
Here are some questions and answers about consumer expenditure and the economy.
Q. Has consumer spending always been this large a participation of the economy?
A. The rate has wavered. In 1929, the year the Great Depression began, consumer spending was closely 75 percent of the population’s economy, a share that grew to 83 percent in 1932 as craft spending shrank.
Conversely, as government spending increased toward the cessation of World War II in 1943 and 1944, consumer spending fell to moiety the total gross domestic product, the widest measure of the economy.
Consumer spending has been edging higher of the same kind with a distribute of the total economy intermittently over the last 25 years, helped by easy credit.
Q. What drives other economies?
A. In many of the largest industrialized countries — Germany, France, Italy and Britain — government spending makes up a much larger contingent of the total administration.
