Consumer economy

A consumer economy describes an economy driven by consumer spending as a percent of its gross domestic product, as opposed to the other major components of GDP (gross private domestic investment, government spending, and imports netted against exports). A consumer economy describes an economy driven by consumer spending as a percent of its gross domestic product, as opposed to the other major components of GDP (gross private domestic investment, government spending, and imports netted against exports). In the U.S., it is usually said by economists, including in Henry Hazlitt's 'Economics in One Lesson' that 70% of spending is consumer-based, but this number is disputed by economists like Businessweek columnist Michael Mandel,. The absolute income hypothesis argues that income and demand generate consumption, and that the rise in GDP gives life to a rise in consumption. It was popularized by Keynes.Milton Friedman argues for a permanent income hypothesis, that consumption spending is a function of how rich you are.