From the course: Economics for Everyone: Understanding a Recession
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Consumer spending
From the course: Economics for Everyone: Understanding a Recession
Consumer spending
- Consumer spending is the most important part of most economies. In the United States, for example, people buying stuff, consumer spending, is 70% of GDP, of the entire economy. And that's really good because when people have jobs and they're out there spending, consumer spending's up, growth is up, things are good. When there's a recession, people lose their jobs, spending goes down, people get scared, and this is really bad for economic growth because 70% of it comes from people spending. And if they're not in the mood to spend and they're a bit nervous, economic growth can weaken further. There are three main parts of consumer spending. First, there are durable goods. These are goods you buy that last for a few years, right, or longer. Things like cars or dishwashers, refrigerators, these are things that last a while. Then there are nondurable goods, those are things you consume like food or paper products, clothes,…
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