Does it mean "consumer spending"?

Services make up a huge part of the American economy. While the consumer accounts for about two-thirds of gross domestic product, services account for about 61% of all that spending. However, the level of services expenditures was off about 17% in the third quarter from the same period a year ago.

Source: https://www.cnbc.com/2020/12/08/economic-growth-will-be-better-than-expected-thanks-to-the-resilient-services-sector-goldman-says.html

1 Answer 1


This is economic jargon taken to extremes.

In most simple macroeconomic models, the output of the economy is divided into four sectors: consumer goods and services, government goods and services, exported goods and services, and capital (or investment) goods.

In a fit of absurd personification, the goods and services produced for purchase by consumers have been replaced by a single consumer.

When you translate out of stock-market babble, what it means is

Normally, about 67% of total expenditures in the U.S. economy represent expenditures on consumer goods and services. Of that 67%, approximately 61% represent consumer services such as haircuts, doctor’s visits, airplane travel, etc. In other words, expenditures on consumer services constitute about 41% of purchases in the U.S. economy, and such purchases are approximately 17% lower in 2020 than in 2019. That alone represents a reduction in gross domestic production sold of about 7%.

As pure analysis, it suggests that consumer demand, if it quickly reverts to historical norms, may on its own increase output by up to 7%.

But it is phrased in deliberately obscure terms. 67%, 61%, and even 17% are much larger than the potential but maximum gain of 7% that the numbers actually imply. Moreover, the personification of the entire population of the U.S. into a single consumer begs the question of whether all or even most consumers will in fact want or be able to revert to past patterns of behavior.

Wall Street talk is designed to sound economically sophisticated without ever being numerically exact or legally challengeable. Academic economists have a catch Latin phrase, ceteris paribus, meaning all other things being the same. What this means in practice is that academic economists can never be proved wrong because all other things are never exactly the same. It’s not science but rather mumbo jumbo. But at least academic economists’ catch phrase alludes to their prediction’s lack of reliability. Wall Street types almost never even allude to it.

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