Shoppers Are Spending But It May Not Last
Meyersohn, Nathaniel
CNN.com
Posted 12/22/2018
Keywords
GDP, consumption, investment, government spending, net exports
Current News Topic
# 6 Introduction to Macroeconomics
Article Synopsis
Consumer spending appears to be robust for the 2018 holiday season. November retail sales are 4.2% higher than last year. Online sales are up 18% over the same period last year and U.S. consumers set a new record racking up $110 billion in online purchases since November 1. The National Retail Federation expects holiday shopping to be up by 4.8% relative to last year.
Despite the current optimism there are some signs that 2019 economic growth may not fare as well. Global growth is experiencing “some softening” according to Federal Reserve Chairman Jerome Powell. Examples include slower sales in China due to the trade war and sluggish UK sales attributed to Brexit and the resulting lower consumer confidence. Fed Ex reports European shipments have “weakened significantly over the last three months.”
Tumbling stock markets and the uncertainty over Chinese tariffs also loom large on everyone’s mind. Some experts believe both factors will reduce consumption in 2019 while others expect larger tax refunds to boost consumption in the first quarter.
Exercise 1 Questions
1. Complete the sentence: The total dollar value of all final goods and services produced in a country is known as;
2. Which of these components represents the largest fraction of U.S. GDP?
a. consumption
b. government spending
c. investment
d. none of these
3. Graphically, show the impact of an increase in consumer spending on aggregate output.
Exercise 2 Questions
1. Fill in the blank: Online sales are ___________ higher relative to the same period last year.
2. The National Retail Federation expects holiday shopping to be higher relative to last year.
a. 3.5%
b. 4.8%
c. 4.2%
d. none of these
3. True or false: Consumer spending is expected to increase by 5% or more during 2019.
Exercise 3 Discussion Questions
1. What factors may push consumer spending higher in 2019?
NOTE TO INSTRUCTOR: Survey the class. Do they spend or save their tax refunds?
2. What factors may push consumer spending lower in 2019?
NOTE TO INSTRUCTOR: Discuss how the stock market affects our spending.
3. How could the Federal Reserve affect consumer spending?
NOTE TO INSTRUCTOR: Discuss how interest affect consumer spending.
Pearson Economic News 