U.S. Outspends Peers
Today's release of the third-quarter U.S. Gross Domestic Product figures gives us a good opportunity to take a close look at how much American consumers spend and how that compares to citizens of other nations.
Everyone knows Americans like to spend money. But do you know how much?
In the U.S., 70.2 percent of the GDP is made up of what consumers spend. In other words, the U.S. GDP was $13.8 trillion last year. What consumers spent on stuff -- houses, refrigerators, DVDs, dance lessons -- accounted for $9.7 trillion of that.
Buying things makes the U.S. economy go.
Consumer spending has been faulted by some for helping to exacerbate the current financial crisis, which began as a glut of cheap credit. Consumers used that credit to buy houses, which soared in value. Then, they took money out of those houses to buy things. When the housing prices collapsed, many consumers found themselves overextended.
But how does consumer spending in the U.S. compare to that in other countries? Are Americans runaway spendthrifts? Or not?
Some comparisons are tenuous.
For instance, consumers in Tanzania, Ukraine, Egypt, Armenia and the U.S. are very different and live in wildly different economies. Yet, consumer spending in each of those nations accounts for about 70 percent of GDP.
For a better comparison, take a look at U.S. consumer spending compared to that in the other nations that make up the G-8 group of industrialized nations -- the U.S.'s closest peers:
It's worth noting that U.S. consumer spending has not rocketed upward in recent years. According to the World Bank, it has edged up steadily from 1960, when it accounted for 64.1 percent of the U.S. GDP.
Which is the thriftiest of the 189 nations surveyed by Euromonitor International, using data from the IMF and the U.N.?
The tiny northeast South American nation of Suriname, a former Dutch colony, where consumer spending accounts for only 5.41 percent of GDP.
But that probably has less to do with Surinamese parsimony and more to do with events beginning in 2000, when Suriname's government began trying to fight inflation rates of 100 percent by instituting an austerity program and raising taxes.
Which nation is the world's biggest spender?
That would be Afghanistan, where consumer spending accounts for 115.72 percent of GDP, meaning the nation spends more than it makes.
However, Afghanistan is a statistical outlier. The Central Asian nation's economy is recovering from several years of war and Taliban control and depends greatly on foreign aid. Further, the country's most viable products -- poppy cultivation for heroin and the opium trade -- cannot be counted as a legitimate part of the GDP.
-- Frank Ahrens
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