The latest economic data has been released, and the media is reporting that consumer spending increased slightly in January despite the fact that consumer income hasn’t increased. Apparently this is a good sign because it shows that consumer confidence is increasing if people are willing to spend from savings.
Invariably, reporters will say things like: consumers account for almost three quarters of the economy in this country.
I’ve always found such a statement to be mildly absurd. It implies that there are two different economies, a business-to-business economy and a business-to-consumer economy. The reality is that the economy is an incredibly complex and intertwined web of interactions between people and businesses in a multi-hued cacophony.
If consumer demand for housing rises, it will create more jobs for construction companies, which in turn creates more jobs for the companies that sell products to construction companies, which in turn creates more jobs for the companies that sell products to companies that sell products to construction companies. But at the end of the day, none of this would be possible if people didn’t buy houses.
Business-to-business spending only occurs because somewhere down the line there is a business-to-consumer transaction.
News flash to economists and business people: 100% of the economy is driven by….. wait for it….. people.
Unless dogs start spending their own money for the treats they really want, all money is transacted by human beings. (Perhaps Boston Thumb Cats could whip out cash for catnip purchases?)
So while we’re at it, let’s also strike the word “consumer” from our vocabulary. Consumer is just a fancy jargon-y word, designed to distance our thinking from the concept it replaces, which is “a person who buys things.” Since we’re all people who buy things, let us simply replace the word “consumer” wherever it occurs with the word “person.” Kinda puts things in a more human perspective, which is A Good And Useful Thing.