True Consumption as Percentage of GDP
To follow up on Consumer Goods vs. Factors of Production:
In that post I illustrated consumer goods production vs. investment goods production in the US. I noticed that the composition of the GDP at bea.gov has one flaw: It includes so called “Residential Investment” under Investment. But what mostly falls under this category are purchases of new homes.
A home clearly does not qualify as a factor of production and it is thus a mistake to include the production of it under investment goods (factors of production). It makes a lot more sense to include it under consumption.
The percentage of consumption vs. GDP throughout history would then look like this:
The likely bottom for a serious recovery would here be somewhere between 86% and 90%.
Related posts:
- The True Gross Domestic Product
- Consumer Goods vs. Factors of Production
- Q2 2009 Data on Sales, Investment, Consumption & Imports
- Consumer Credit – June 2009
- True GDP – Q4 2008
- US Consumer Mood Down in July Survey
- The End of Consumerism
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