RESPOND TO THE 2 DISSUSSIONS BELOW

Omar Armengol

According to Damooei, "A good economy is one in which people can work and afford a life that meets their basic needs and lives with human dignity. A good economy is an economy that lives in peace and harmony with itself and the environment and serves the common good." It's important for the country to have a strong economy so not only citizens can afford a roof over their heads, put food on the table, and buy clothes, but to also purchase products that help develop our skills and talents. Putting money into other business allows the business to expand and give more job opportunities to citizens. A strong economy can be characterized as having a low unemployment rate and increases to employees' wages. In theory, if the prices of products increase, so should employees' wages. However, If prices of products increase but employee wages don't, citizens will slowly have to stop buying wants and focus more on buying things they need. A recession may occur.

Overall, a strong economy encourages growth and spending among consumers. This typically involves low unemployment rates and a steady job market. consumers are allowed to buy non-necessary products. This allows consumers to spend money on businesses and businesses need money in order to stay alive. Money is always moving and once the money stops moving trouble like recession and inflation begin.

Eliza Franklin

It makes sense that a strong economy would lead to more discretionary income which then allows for more consumer spending which would then help the economy. In other words, when people have more money in their pockets, they will probably spend it, or at least part of it. Therefore, a strong economy would influence consumer spending in a positive way. There would be a direct correlation between the two. This makes logical sense to me. However, I am sure there is more to the picture than this simple understanding.

Keynesian economic theory believes that consumer spending is the most important component of short-term economic performance since it is the largest component of Gross Domestic Product (GDP) (Potters, 2023). Economists who follow this philosophy believe that consumers should spend more and save less in order to spur economic growth (Clarke, 2023). Spending leads to increased output which further increases economic growth. For example, a consumer buys a custom t-shirt from a local business. That business has to buy the blank t-shirt, the material needed to customize it, pay the employee who runs the machine, rent or buy the building that houses the business, etc. Therefore, the more t-shirts that are sold, the more the business can afford to put back into creating more t-shirts. In doing so, the business is buying more supplies, hiring more employees, etc. This means that the business itself is stimulating the economy more because it is selling more. I fully understand that this is a rather simplified approach to economics and there are many other economic philosophies. However, this relates a strong economy to consumer spending and vice versa.

There are several indicators that are examined to determine if the economy is strong or not (Thangavelu, 2024). They include the GDP, employment figures, industrial production, consumer spending, inflation, home sales, construction spending, manufacturing demand, and retail sales. All these components can be tied together. If consumers cut back on spending, then business will cut back on production perhaps even reducing wages or employment. Income and employment are key factors in consumer spending (Potters, 2023). In fact, Potters states, "those who have steady wages have the ability to make discretionary purchases, thereby generating demand" (online). Therefore, the bottom line is that the more people spend, the more the economy will grow. The more the economy grows, the more money that people will have to spend. Granted, this is all a rather idealized and simplified version that does not, for sake of simplicity, take into account all outside influences that can impact the economy and consumers' discretionary funds.