2/3rd (75%) of the economy is consumers buying? but it is dropping?

Discussion in 'Economics' started by noob_trad3r, Oct 30, 2009.

  1. Consumer spending, which normally accounts for over two-thirds of U.S. economic activity, in August was bolstered by the popular "cash for clunkers" program that gave discounts on some new motor vehicle purchases.


    I am a bit confused, how is this number accurate. You cant have a functioning economy if over 75% of it is people buying stuff but not making stuff.

    Am I right or is there something wrong, how is this sustainable?
  2. spinn


    America is extremely top heavy with parasites like drs and Goldman Sachs directors........

    it is why I wonder how or when this nightmare will end.........
  3. What if consumers go back to 1950 style spending habits??

    How will the US cope.
  4. clacy


    Not very likely. I do think Americans have adjusted their spending habits slightly, but those days are long gone, where the average American spends only what he needs and stashes away as much cash as possible.
  5. I don't know about that....

    We can't "borrow and spend" like before, as (1) our house is no longer our "ATM", and (2) lenders are less willing to grant credit.

    As the joblessness persists, people will see how hard it is to replace a job once lost and will likely build cash reserves in case they lose their job in the future.

    For people to be out of debt and to have assets is a healthy thing... for all except the government who want to justify deficit spending and other forms of thievery.

    America is still in for a MAJOR adjustment, one way or another.... some of those "ways" would be most unpleasant.
  6. Banjo


    The biggest difference between now and then is that the product you bought had a lot of domestic upstream jobs creating it before it got to you. We were essentially feeding off ourselves, consuming what our neighbors produced, and growing ourselves through that process. That paradigm is gone.
  7. Why did we change that? It does not seem to do good for anyone.
  8. That change was inevitable, as economic power and demographics shift towards the West. However, we hastened the transition and in the process did ourselves great harm.... globalization... outsourcing for short-term profits.
  9. You probably shouldn't be trading if you don't know that 2/3 is not 75%
  10. #10     Oct 30, 2009