Question

Discuss the following: The consumer drives the US economy? Explain.

Answer 1

Consumers drive the US economy because the US economy is consumption driven. The GDP of a country consists of consumption, investment, government spending, and net exports. US imports more than it exports. So, its net exports is negative. More than 70% of the US GDP consists of consumption. Therefore, consumer spending is the most important component of the USA GDP. Countries like China depends heavily on exports for economic growth. However, US economicy depends heavily on consumer spending. If there is a fall in spending, the US economy will be badly affected because of the high proportion of consumer spending in USA GDP. High consumer spending allows US firms to invetsmore, expand, hire more workers, etc. This creates more income and more consumption. Therefore, consumers drive the USA economy.