The consumerist mystique
It’s business spending, not consumer spending, that drives our economic cycles, says Mark Skousen in The Christian Science Monitor. True, consumer spending does make up 70 percent of our GDP, “but GDP only measures the value of final output,” leaving out a “big chunk of the economy.” If you look at “total spending in the economy at all stages,” consumer spending makes up 30 percent; business investment, 50 percent. So “if you want to know where the stock market is headed,” forget the “Keynesian principles” of the economic primacy of consumer spending. “They’re not true.” Look instead to business spending, inflation, interest rates, and productivity numbers.
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