The role of consumer spending in the business cycle, is best understood by noting that:

I. consumer spending and investment seem to have approximately equal parts to play in the cycle, although the two are so intermixed that it is difficult to separate one from the other and to analyze the role of either.

II. changes in consumer spending are most often the initial disturbing factor, and the impact then spreads to investment, thus intensifying the original disturbance.

III. changes in consumer spending on nondurables most commonly initiate the downturn in a major business cycle, whereas increases in consumer durable purchases are most likely to start the upturn as replacement of worn-out durable items becomes necessary.

IV. changes in consumer durable purchases may occasionally set off an upswing or downturn, and changes in consumer spending will intensify the effect of any disturbance originating outside the consumer sphere, via the multiplier.