Consumer Spending Is Overrated


One more advocate of setting the record straight on consumer spending. Don Marron takes up the crusade that Michael Mandel started to accurately portray the contribution that consumer spending makes to GDP.

Journalists, commentators, and economists often say that consumer spending makes up 70% of the U.S. economy. Indeed, it’s easy to find several examples of that claim in today’s coverage of the latest GDP data (e.g., here). And, full confession, I’ve used that phrase a few times myself.

There’s just one problem with the 70% claim: it’s wrong. Consumer spending actually makes up only 60% of the economy.

So read the whole post and then you can dazzle your friends at one of the long weekend pool parties.

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