ABSTRACT
The largest single element of expenditure in the US economy comes from the American consumer. Consumer spending was one of the strengths that kept the economy growing through the 1990s and for the first seven years of this century. This chapter offers an explanation of how aggregate consumption has grown in the long run; an explanation and discussion of the factors that determine aggregate consumption; and a description of how consumption behaves over the business cycle. The spending pattern of most Americans is not merely determined by the choices made by individuals, but represents the objective factors of how national income is distributed among people. Total consumption and employee income mostly move together. In addition to income and credit, consumer behavior is influenced by the total amount of wealth a person holds. The average capitalist-owner has large incomes of profits, rent, and interest.
