Consumer Spending

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Lipstick Effect

    A theory that states that during periods of recession or economic ...
  2. Average Propensity To Consume

    The average propensity to consume (APC) refers to the percentage ...
  3. Consumer Discretionary

    A sector of the economy that consists of businesses that sell ...
  4. John Maynard Keynes

    An author and economist who is well-known for his stance that ...
  5. Halo Effect

    The halo effect is a term used in marketing to explain the bias ...
  6. Consumer Price Index - CPI

    A measure that examines the weighted average of prices of a basket ...
Related Articles
  1. Consumer Confidence: A Killer Statistic
    Retirement

    Consumer Confidence: A Killer Statistic

  2. Consumer Spending As A Market Indicator
    Markets

    Consumer Spending As A Market Indicator

  3. Are You Saving Too Much?
    Retirement

    Are You Saving Too Much?

  4. Understanding World Bank Data
    Investing

    Understanding World Bank Data

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center