Consumer Spending


DEFINITION of 'Consumer Spending'

The amount of money spent by households in an economy. The spending includes durables, such as washing machines, and nondurables, such as food. It is also known as consumption, and is measured monthly. John Maynard Keynes considered consumer spending to be the most important determinant of short-term demand in an economy.

BREAKING DOWN 'Consumer Spending'

Often these monthly numbers are compared to the previous month or the same month of the previous year. When the government wants to stimulate the economy it will attempt to increase consumer spending. This can be done by tax cuts or even through giving out a lump sum or money. The increased income is expected to cause individuals to buy more, which means companies will experience higher revenues and can potentially hire more workers.

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