Mark Skousen. Consumer spending makes up more than 70 percent of the economy, and it usually drives growth during economic recoveries.” ... In the business cycle, production and investment lead the economy into and out of a recession; retail demand is the most stable component of economic activity. Government spending reduces savings in the economy, thus increasing interest rates. This can lead to less investment in areas such as home building and productive capacity, which includes the facilities and infrastructure used to contribute to the economy's output.
