Wednesday, June 26, 2013

Will consumption collapse?

Running at about 70 percent of GDP, consumption has been above long-term averages for a while, with much of it financed by debt.  Households are deleveraging where they can.  Where will consumption go?


Of course, for the majority of consumers, the weakness in real disposable income has been greater than depicted because of the great degree of inequality in the income distribution.  Government spending won’t pick up the slack, and neither will investment, from all appearances:

Graph of Shares of gross domestic product: Gross private domestic investment: Fixed investment: Nonresidential

No comments:

Post a Comment