The remaining one-third of our personal consumption expenditure is on goods. These include so-called durable goods, such as washing machines, automobiles, and furniture. More frequently, we buy non-durable goods, such as gasoline, groceries, and clothing. There are five determinants of consumer spending. These are the things that affect how much you spend. Changes in any of these components will affect consumer spending.
The most important determinant is disposable income. That's the average income minus taxes. Without it, no one would have the funds to buy the things they need. That makes disposable income one of the most important determinants of demand.
As income increases so does demand. If manufacturers ramp up to meet demand, they create jobs. Workers' wages rise, creating more spending.
It's a virtuous cycle leading to ongoing economic expansion. If demand increases but manufacturers don't increase supply, then they will raise prices. That creates inflation. The second component is income per capita. It tells you how much each person has to spend.
Income measurements might rise just because the population increases. Income per person reveals whether each person's standard of living is also improving. Income inequality is the third determinant of spending. Some people's income may rise at a faster pace than others.
The economy benefits when most of the gain goes toward low-income families. They must spend a more significant share of each dollar on necessities until they reach a living wage. The economy doesn't benefit as much when increases go toward high-income earners. They are more likely to save or invest additions to income instead of spending. The fourth factor is the level of household debt.
That includes credit card debt, auto loans, and school loans. This is often referred to as the "core PCE price index. Note: In addition to the data above, BEA also produces Underlying Detail Tables showing spending estimates for more detailed categories of goods and services. These tables should be used with caution, however, because the quality of the data is significantly lower than the published data covering higher-level categories.
These tables and more information about them are available in the National Data section of our Interactive Data. What can you do with consumer spending numbers?
Answer questions like: How strong was consumer spending compared with the month before? What types of goods or services saw a rise in spending? This has the effect of raising the standard of living, affording consumers more wealth even when their incomes remain the same.
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These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Consumer spending set for strong growth during — With fears of the virus declining due to rising vaccinations, it is likely that the country could edge back to the prepandemic normal by the end of this year.
It is likely that pent-up demand will also play a part as consumers deploy some of their savings to make up for all the travel and leisure activities they missed out on in As some workplaces open after more than a year-long hiatus, demand for transportation services will likely rise, although this is likely to face challenges from any hybrid work model where employees spend part of their work week in office and the rest remotely. Overall, services spending is likely to expand by 6.
Replacing one car with another every year or adding furniture at home frequently holds little sense. Similarly, spending on gym equipment will also likely ease. Consequently, growth in spending on both durable and nondurable goods are likely to ease this year and the next figure 6.
In fact, given the stockpile of durable goods accumulated through most of last year and part of , spending on durable goods is forecasted to contract in Headaches from headwinds? Some shifts in spending may stay for long The post—COVID world will have a lot in common with the one we lived in before the pandemic, but some things may change permanently.
The future of work may well turn out to be a mix of in-person, remote, and hybrid work. Such a change will likely nudge consumers to head more to single-family homes in the suburbs than multi-family units within the city. A shift to larger homes with adequate space for home offices will translate to higher spending on home office furnishings and home utility services compared to prepandemic levels. Life in the suburbs may also lead to a rise in car ownership due to mobility requirements.
Also, people—even those living within a city—may prefer to have their own set of wheels as they may feel safer traveling alone rather than share space with people outside their households.
Most consumers are therefore unlikely to engage as much in ride-sharing and mass transit than they did in Figure 7 also reveals that people are keen to travel more and eat out as the health scenario improves further.
Those at the bottom may find it even more difficult to spend on health care, insurance, retirement, and transport. Unless otherwise stated, all data is sourced through Haver Analytics. All data on coronavirus cases and vaccinations in the United States is taken from this source.
All survey data quoted in this article is from this source. View in Article The figures quoted here are averages calculated from weekly surveys over the two months.
All forecasts cited in this article are from this source. View in Article Ibid. Among 22 major occupations, the categorization of high-, medium-, and low-wage occupations is based on average and median wages. The data is nonseasonally adjusted.
View in Article Deloitte Insights, The post-pandemic economy. Cover art by: Tushar Barman. Deloitte Global Economist Network. Learn more.
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