Consumer
What is a Consumer?
A consumer is a key agent in the economy that is engaged primarily in the
consumption part of the GDP
equation. Generally the word consumer refers to households and individuals.
Certainly in terms of the economic metrics which are designed to assess and
measure this part of the economy are built upon this definition. For example consumer
confidence assess consumers' level of confidence and plans to buy; retail
sales measures the volume of consumer spending; consumer
credit measures the amount of credit outstanding that is lent to consumers;
employment and income statistics give clues as to disposable income and the
economic health of the consumer, and so-on. In economies like the US, the
consumer is of vital importance to the economy as the consumption part of the
GDP equation makes up for the majority of activity (and of course drives other
parts of the equation e.g. greater imports (which means lower net exports),
higher investment to cope with demand and increase production.
How does it relate to Markets?
Because of the importance of consumption to an economy, the prospects and
activity of consumers is of vital importance to business and economics; and as
such, impacts on the markets. The activity levels of consumers, or the amount of
consumer spending impacts directly on the revenue/earnings companies that
provide goods and services to consumers. The outlook for the consumer is also of
key importance to the overall economy, so tracking indicators that measure the
wealth, income, and spending of consumers will be of vital importance to monitor
in order to understand and foresee wider macroeconomic trends which can be used
to form views for investment strategy, asset allocation, and market timing in
relation to the course of the economy.
Sources and further reading:
Investor Words
- Consumer
Encyclopedia Britannica - Consumer
Answers.com - Consumer
Graph Library:
n/a
Original Source:
http://www.econgrapher.com/encyclopedia-consumer.html
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