Consumer economy

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A consumer economy describes an economy driven by consumer spending as a percent of its gross domestic product, as opposed to the other major components of GDP (gross private domestic investment, government spending, and imports netted against exports).[1]

In the U.S., it is usually said by economists, including in Henry Hazlitt's "Economics in One Lesson"[2] that 70% of spending is consumer-based,[3][4] but this number is disputed by economists like Businessweek columnist Michael Mandel,.[5] Consumer spending in the US rose from about 62% of GDP in 1960, where it stayed until about 1981, and has since risen to 71% in 2013.[6]

Historical[edit]

England gained a consumer economy in the late 18th century. They had many exotic items and it created an environment for a pleasurable, rather than mundane, and desire-based mode of shopping.[7] The US consumer economy in the 1920s included many leisure items and products that improved housework. They introduced advertising to sell goods and lines of credit.[8]

Modern[edit]

Many countries have a consumer economy.

According to Kevin O'Marah of Forbes magazine, Africa's consumer economies remained "buoyant" despite the worldwide collapse in the commodity industry, despite the fact that commodity extraction industries have long dominated the region.[9]

Some analysts, including an anonymous columnist at The Economist stated in 2014 and early 2015 that China was likely to become a consumer economy. [10][11][12]

See also[edit]

References[edit]

  1. ^ Education 2020 Homeschool Console, section Vocabluarly of Unit on "Economic Boom of the 1920s", quote: "CONSUMER ECONOMY: Definition: An economy that depends on a large amount of spending by comsumers. - school login required, accessed December 1, 2009
  2. ^ "The Importance of Consumer Spending | Chron.com". Smallbusiness.chron.com. 2010-07-19. Retrieved 2016-01-05. 
  3. ^ "US GDP is 70 Percent Personal Consumption: Inside the Numbers". Mic.com. 2012-09-21. Retrieved 2016-01-05. 
  4. ^ "What Is a Consumer Economy? (with pictures)". Wisegeek.com. 2015-12-15. Retrieved 2016-01-05. 
  5. ^ Mandel, Michael. "Consumer Spending is *Not* 70% of GDP". BusinessWeek.com. Retrieved 2016-01-05. 
  6. ^ "Personal Consumption Expenditures (PCE)/Gross Domestic Product (GDP)" FRED Graph, Federal Reserve Bank of St. Louis
  7. ^ "The Consumer-Based Economy". Web.utk.edu. Retrieved 2016-01-05. 
  8. ^ "A Consumer Economy". Ushistory.org. Retrieved 2016-01-05. 
  9. ^ "Africa's Consumer Economy". Forbesm. Retrieved 2016-01-05. 
  10. ^ "China's economy: The world's second biggest consumer". The Economist. 2014-02-18. Retrieved 2016-01-05. 
  11. ^ "Consumers can drive China’s transformation to a high-income economy with steady growth | Europe’s World". Europesworld.org. 2015-02-02. Retrieved 2016-01-05. 
  12. ^ "China’s Shift to a Consumption-Driven Economy". Cornell Current. 2014-11-12. Retrieved 2016-01-05.