Personal consumption spending increased 1.4 percent in the third quarter, about the same as the 1.5 percent increase in the second quarter.
FORBES: The Revised Third Quarter GDP--Better, But Not By Much
At the same time the national price index for personal consumption spending increased 0.3% in the third quarter, which is seasonally adjusted, but may reflect a slight pick up in pre-holiday spending.
All other, and arguably more important, indicators (Production and Income, Employment, Unemployment and Hours, and Personal Consumption and Spending) registered very negative readings.
Put a 25 percent tax rate on individuals and corporations and see how it comes out in terms of personal consumption expenditures and corporate spending for plant and equipment, even research and development.
In the fourth quarter 2009 GDP, business spending trumped personal consumption by almost seven to one.
The only bright spot for Japan last quarter was consumption, but personal spending cannot remain high if the rest of the economy continues to crumble.
Negative drivers were negative contributions from private inventory investment, federal government spending and exports, partially offset by personal consumption expenditures, nonresidential fixed investment and residential fixed investment.
Which is to say, the Gross Domestic Product of a country is equal to its total Consumption (personal and business) plus Investments plus Government Spending plus Net Exports.
The rise in personal spending led to a 0.5% gain in real consumption, its strongest level since December 2009.
FORBES: Consumption Picks Up In July Indicating Lower Risk Of Deflation
And although the extra wealth might be used for personal consumption, it could also, if Canadians preferred, be used to increase social spending.
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