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BucNY

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#15 : April 24, 2013, 04:01:27 PM

Consumer spending isn't the major driver...business spending is. Business spending is created by investment which requires savings. C

http://www.fee.org/the_freeman/detail/consumer-spending-drives-the-economy#axzz2QmbCuf8l

Consumer spending is often based (by op-ed writers in the NYT for example) on "personal consumption expenditures" but PCE doesn't mean what it sounds like it means so while PCE is 70% of the economy but in reality that figure that is driven by what you and I call consumer spending is less than 40%.

Consumer investments, okay. What would make a company a good investment? People not buying their products? No, people buying their products. I see what you're saying but are you telling me that if we all spent 50% less of our expendable income and saved it, that it would have no effect on our economy? Are you really saying that?

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John Galt?

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#16 : April 24, 2013, 04:46:18 PM

Consumer spending isn't the major driver...business spending is. Business spending is created by investment which requires savings. C

http://www.fee.org/the_freeman/detail/consumer-spending-drives-the-economy#axzz2QmbCuf8l

Consumer spending is often based (by op-ed writers in the NYT for example) on "personal consumption expenditures" but PCE doesn't mean what it sounds like it means so while PCE is 70% of the economy but in reality that figure that is driven by what you and I call consumer spending is less than 40%.

Consumer investments, okay. What would make a company a good investment? People not buying their products? No, people buying their products. I see what you're saying but are you telling me that if we all spent 50% less of our expendable income and saved it, that it would have no effect on our economy? Are you really saying that?


All of us couldn't reduce spending by 50%. Only 64% of all households even have any discretionary income http://www.marketingcharts.com/direct/64-of-americans-have-discretionary-income-2340/

Total discretionary income was about $1.7 trillion and about 35% of that is saved (this includes IRAs and 401ks and other pension/retirement plans) so if 15% more was saved the impact would be $255 billion less consumption, (much of which is imported products) which is 1.7% of GDP ($15 trillion)

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