That 70% Consumer Spending.....is 19.6%

Kudos to Bob Moon of Marketplace for challenging conventional wisdom, succintly.

How many times have you heard that a real recovery is up to us consumers, who now make up “70% of the economy.” Forget the old manufacturing/industrial complex, focus on the consumers, whose wallets are semi-sealed, we’ve been told for last two years.

In a report this week, Moon talks with Standard and Poor’s David Wyss, who tells us that really the 70% is more like 40% because of statistical gymnastics, and that of that 40%, only 70% of it really counts because 30% of what we spend is on exports, which of course don’t produce much in the way of American jobs. So we’re down to a real impact to 19.6%. How does “the economy” magically get moving again? Damned if anyone really knows, at this points, but, clearly, consumer spending isn’t what we really thought it to be as a driver.