Essay Example on Analyzing the components of spending by consumers C

The total amount of spending by consumers on durable goods nondurable goods and services in a given period of time Farnham 2014 This component will be examined to see how it will develop and change in the short and medium run Consumer spending has a large influence on the real GDP accounting for approximately 68 9 percent of the real GDP for the third quarter in 2017 thus it is important for this topic to be thoroughly examined From examining data from the Bureau of Economic Analysis it can be observed that there is a fluctuating percentage change in consumption expenditures for the different quarters Q1 Q3 in 2017 under the category of personal consumption expenditures During the 2017 first quarter there was only a slight change in the percentage of consumption expenditures with an increase of 1 9 from the preceding period This change in value contrasts to the larger percentage of consumption increase for quarter 2 at a value of 3 3 2 During the third quarter the percentage increase from the preceding period was recorded at a value of 2 2 which is still a larger percent increase than that of the first quarter 2 After examining quantity indexes for the year 2017 it can be concluded that personal consumption expenditures have overall increased since 2015 Goods both durable and nondurable have seen an increase since the first quarter of 2016 Furthermore services have increased significantly since 2015 Historical Data on Personal Consumption Expenditures Analysis Looking at historical data can give a better outlook of the trends of personal consumer expenditures throughout the years From 1990 2017 personal consumption expenditures have consistently increased with only a slight decrease in 2008 2009 In addition expenditures on goods and services for 1990 2017 have gradually increased with few decreases in 2008 2009 and a minor decrease in 2011 for goods 

This can be explained as when a firm expands their assets through buying goods or through investing As quoted in the text Economics for Managers by Paul Farnham in regard to investments Business fixed investment encompasses the spending on structures equipment and software that provide the industrial capacity to produce goods for all sectors of the economy Variables included in gross private domestic investments will be analyzed compared and contrasted between different time periods in order to have a better future prediction of the short and medium term real GDP It is important to emphasize that the data examined for this analysis came from the Bureau of Economic Analysis U S Department of Commerce For 2017 the gross private domestic investment increased throughout the quarters recorded Q1 Q3 The 2017 third quarter for gross private domestic investment accounted for approximately 16 7 percent of the real GDP which is slightly more than that of 2016 which was 16 3 percent during the third quarter 1 Most of the values of components included under gross private domestic investment were positive and increased with the exception of residential investment which slightly decreased after the first quarter in 2017 Change in private inventories were negative for the first quarter in 2017 but increased during the second and third quarters during the year Change in private inventories have been significantly dropping since 2015 and just now are starting to increase during the third quarter of 2017