Sample Essay on United States Consumer Spending

United States Consumer Spending

Consumer spending or consumption varies from one country to another. Being the grease of the economy and determinant of the way economy is shaped, United States consumer spending rises and falls. Consumer spending has been one of the forces that have pushed U.S economy to better standards in the globe.  In fact, consumer spending makes up to 70% of economy or more. The main role of consumers in any market is to buy goods and services; they spend money. The amount many spend is based on their income, preferences and such spending habits impact the U.S economy greatly.

Consumers in the United States markets play great role in maximizing utility. They allocated their scarce commodities; money and limited time most effectively. With the ever-changing consumer spending mentality, it is also the responsibility of consumers to make apt shopping decisions. Consumers in every market have to weight their choice against the probable opportunity cost. What consumers do in the U.S market is invariably valuable and vital.

In case, where consumers stop spending and saves income, then the market is in big trouble. In 1929 consumer spending was estimated to be about 75% of the nation’s economy. Unfortunately, during the World War II the spending reduced to about 50% basically due to large government spending and lack of enough consumer products. Consumer spending then rose to 62% in 1960 and remained constant until 1981, but it has since risen to 71% in 2013.

Consumer spending in the United States has increased to 10910.4USD billion in 2014 from 10844.30 USD Billon has reported by the U.S Bureau of Economic Analysis. According to Bureau of Economic Analysis, majority of U.S consumers spend money on durable goods such as motor vehicle and part, recreational goods, household equipment and many other durable goods. Other consumers go for non-durable goods like food and beverages, clothing, footwear, and energy goods.

Services such as health care, transportation services, recreation services, financial services and housing and utilities are also widely purchased in U.S marketplace. The macro environment impacts the business condition greatly. It also affects consumer spending in a number of ways;

  • Taxes policies enacted by US government affect consumers and net consumer spending.  Tax management is likely to increase or decrease consumer spending.
  • Consumer feelings or preferences are strong elements of consumer spending. Consumer sentiments towards certain goods or services cause fluctuations in the economy as the attitude of consumer on the state of the economy may not be favorable. Hence, they will fail to spend on a certain good and save the money.
  • Government economic stimulus in form of checks or rebates impact consumer spending. Many consumers do not like rapidly changing spending habits. Hence, many save and rally on future spending.
  • The relationship between oil and economy in the U.S is a strong one. Increase of oil prices impacts growth in the economy. This also means high cost for consumers who rely on energy for machinery and vehicles.

Many times when consumers receive high income, they do not spend it all, some save or end up settling debts. Consumers are core part of developing economy and finding better ways of spending is one of the exceptional ways of earning good profits. Understanding the market trend is always a better way for both consumers and sellers who want to ripe big from the sector.

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