Consumer Spending United States(C)
Now that we have understood the national income and product accounts (NIPAs) produced by the Bureau of Economic Analysis (BEA)Â lets analyse the largest component of GDP, which isÂ consumption. Consumer spending in the United States is the most important sector of the economy since it represents over 60% of the GDP figure. However, since consumption expenditure also reflects spending on imports the actual number is slightly less since we need to subtract what is not produced domestically. All economic policy makers worldwide focus their efforts on boosting consumer spending.
Consumer Spending – Durable and Non Durable Goods
Consumer spending United States itself can be further categorised into spending on goodsâ€”durable and nondurable goodsâ€”and services.
Figure: Household Consumption Composition 2015
Consumer Spending United States – Durable Goods
Durable goods are defined as goods expected to last over three years. So typical durable goods would be cars, furniture, bicycles, etc. Nondurable goods would be items such as food, drinks, and medicine.
Figure: Composition of Goods Consumption
Consumer Spending United States – Composition Services
Services would include such things as banking, tourism, and health care. Consumer spending services accounts forÂ over 60% of total spending. A breakdown of spending on services by households in the US is shown in the figure below.
Figure: Composition of Services Consumption
We will see later that there are three economic indicators that give us information on consumption trends before the quarterly GDP report is released, namely
- Car sales
- Retail sales
- Personal Consumption Expenditures.
Next we look at the composition of Investment Expenditure in the United States