Consumption C



Consumptioncan be said to be the total expenditure by the household onnon-durable goods and services plus the flow of current services fromthe consumer durables (Mudida, Pg. 48). It has been presumed todepend on the level of disposable income or the GDP of a country.Following the time series in United States, consumption has beencontinuously increasing with an increase in GDP since World War II.By using data provided by the National Bureau of Economic Research,consumption in US has been in increasing with time until the secondquarter of the year 2008 when it was observed to drasticallydecrease. The trend resumed in the second quarter of the year 2009.This is as indicated in the charts shown in the excel spread sheetsattached. The unique value for this data set of year 2009 was as aresult of the fact that, it was the only source of data existing inthe data series which included the components of GDP such asinvestment, income, savings, consumption, and the governmentexpenditure..

Theanalysis has directly linked the consumption activity to the level ofGDP since consumption is one of the major components of GDP and GDI.Thedata collection involved weighing the trend of various indicators inthe recession of economic activity. This data was made available inform of quarters by the Bureau of Economic Analysis of the UnitedStates with the estimates of real GDP and GDI. According to Gordon(1986), the GDP developed by private forecasting firms andmacroeconomic advisers, real personal disposable income determinesthe consumption level.

Thecommittee of National Bureau of Economic Research (NBER) concludedthat the trend of second quarter of the year 2009 was as the toughmonth for economic activity which was consistent with the previoustough months in the economy. The committee had to believe that themeasure of the GDP aggregates to the output across the entireeconomy. The GDP in the second quarter of the year 2009 cycles, rosestrongly. The committee also made use of GDI which is morecomprehensive measure of the income components rather than the realpersonal income less the transfers.

Bycomparing the trend of the year 2009 and the most recent data of year2010, we can conclude that this recent data is much higher than theprevious years in the recession. This is as indicated the chats inthe excel spread sheet attached.


Business Cycle Dating Committee, National Bureau of Economic Research. 2010. 20 April 2015. &lt

The NBER`s Business Cycle Dating Committee. 2015. 20 April 2015. &lt

Mudida R. (1998). Modern Microeconomics. Macmillan: Oxford University Press. pg 46-50.