Private consumption contributes less to economic decline and recovery than business investment and net exports, according to an article by Ken Fisher of Fisher Investments.
The US economy is a consumer-driven economy with consumer spending accounting for 69% of the GDP. However during economic recessions consumer spending reduces but jumps back quickly than the sharp decline in business investment. So much of the attention of the media is focused on consumer spending it is the business investment that contributes most to recession and recovery.
Private Consumption as a Percentage of US GDP – Chart:
Click to enlarge
Source: Consumers are king: Fisher’s financial mythbusters, Money Observer, June 7, 2016
The above article is another fascinating piece by Mr.Ken busting one of the many financial myths that are often thrown around by everyone.
