The Macro Economy Essay Example | Topics and Well Written Essays - 500 words

The Macro Economy - Essay Example On the other hand, low retail sales can signify that consumers are bent towards saving for the future rather than enjoying the goods offered to them right now. The automobile industry is connected to other items which can be retailed by sellers but pure retail sales figures often do not include automobile sales. This is because automobile sales can vary sharply from month to month but the trends for automobile sales are connected to the trends for retail spending. The consumer price index is a measure of the average prices which a consumer has to pay for basic elements which are required by a household. Increasing consumer price index levels show the influence and impact of inflationary trends in the economy which may convince people to save more and economize when they can. A decreasing consumer price index would suggest that things are getting cheaper for the average consumer and s/he would be more inclined to spend out of his/her savings to make purchases which might otherwise be delayed for the future. Spending is also linked to the GDP because one of the components of the calculations for the GDP of a country is the economic activity of its citizens. For example, American consumers who spend more money in a given year would add to the consumption figures and if other elements of the GDP (investment, government spending, exports and imports) remain the same then the GDP for that year can be expected to be higher than normal. Of course a lower CPI could encourage spending and improve the GDP while a higher CPI would have the opposite effect.