Comments on: Consumer Spending is Not Economic Activity http://wallstreetpit.com/15903-consumer-spending-is-not-economic-activity Tue, 22 May 2012 19:21:52 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Lenny http://wallstreetpit.com/15903-consumer-spending-is-not-economic-activity#comment-103440 Lenny Sun, 07 Feb 2010 20:57:59 +0000 http://wallstreetpit.com/?p=15903#comment-103440 Totally agree, more spending doesn't mean more jobs. When american spending increase, the jobs in China and India increase not in USA. Totally agree, more spending doesn’t mean more jobs. When american spending increase, the jobs in China and India increase not in USA.

]]> By: Jay http://wallstreetpit.com/15903-consumer-spending-is-not-economic-activity#comment-101069 Jay Tue, 02 Feb 2010 08:48:52 +0000 http://wallstreetpit.com/?p=15903#comment-101069 Also, it is important to understand how current consumption is being financed. If it is being done through wage growth, then that is generally positive for the economy. If it is done through the extension of unemployment benefits, then that's another thing entirely. And if it's being done with debt, then in theory we're drawing forward future consumption. This is dangerous, although the music can continue playing for a long time, as we've seen. Looking at GDP in isolation is like evaluating a company simply by its income statement (which many "investors" are also prone to do). Also, it is important to understand how current consumption is being financed. If it is being done through wage growth, then that is generally positive for the economy. If it is done through the extension of unemployment benefits, then that’s another thing entirely. And if it’s being done with debt, then in theory we’re drawing forward future consumption. This is dangerous, although the music can continue playing for a long time, as we’ve seen.

Looking at GDP in isolation is like evaluating a company simply by its income statement (which many “investors” are also prone to do).

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