Vince Pace
Course Relevance: Chapter 9
Reason: This articles speaks to consumer spending as a part of the GDP and how spending in this category impacts overall GDP growth or decline.
Article Summation: Consumer spending increased by 0.5 percent in November and a projected similar amount in December of 2003. This coincided with a more modest increase in income of 0.3 percent and 0.2 percent during the same time periods. The U.S. economy grew at 4 percent in the last quarter of 2003. Durable goods spending in December increased by 1.8 percent, which was higher than November’s 1.0 percent. Spending on services rose by 0.4 percent for both months, and non-durable spending saw an increase of 0.7 percent.
Consumer spending accounts for nearly two thirds of economic activity in the United States, and it is estimated that if this is indeed a spending “trend,” then it will be “sufficient to keep the economic recovery rolling along.” Economists are hopeful that this spending, which some attribute to the tax refund of summer 2003, will lead to economic expansion of 4 percent for 2004.
Questions inspired by this article: If we continue to spend at a rate that exceeds our income how long will our GDP be able to grow? Are we spending our dollars on items that have any lasting value or are we frivously throwing away our hard-earned money?
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