What group can claim credit for being the driving force behind the world’s largest economy? Hint: You are probably a member of this group.

The answer is U.S. consumers, whose spending is responsible for more than 70% of U.S. gross domestic product (GDP). As we’ve seen in recent years, when consumer conditions are bad, the effects can be widespread. If consumer spending falters, it affects business income and tax revenues. If revenues fall far enough, the effects can include increased unemployment, which in turn exaggerates the problem because the unemployed have reduced incomes and tend to make fewer purchases.

Economists, traders, investors, and policymakers all take great interest in the financial health of consumers and what they may do next. Here are some popular indicators of consumer behavior.

The Monthly Retail Trade Survey is conducted by the U.S. Census Bureau, which mails questionnaires to about 12,500 businesses. The Census Bureau uses the data

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The Paradox of Thrift: How a Better Savings Rate is Fueling the Recession

by David Fessler, Advisory Panelist

We’ve all heard this from our parents: “Spend what’s left after saving, instead of saving what’s left after spending.”

Or perhaps this was drummed into your head: “Always save for a rainy day.”

The idea of saving didn’t just start with our parents’ generation, however. Ben Franklin was giving advice on saving way back in 1732 in Poor Richard’s Almanac: “If you would be wealthy, think of saving as well as getting. Creditors have better memories than debtors.”

As the recession of 2008 hit, Americans suddenly stopped spending, paid down their debts and started saving – some for the first time in their lives…

As a result, America’s savings rate – as a percent of disposable income – has leapt from a little over 1%

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This post is a guest contribution by Asha Bangalore* of The Northern Trust Company.

The National Bureau of Economic Research (NBER), the arbiter of business cycles, officially announced the trough of March 1991 on December 22, 1992 and the trough of November 2001 on July 17, 2003. Based on this history, there is a lapse of roughly 20 months before the Business Cycle Dating Committee has announced the date of a business cycle trough. Real gross domestic product had risen in the second quarter of 1991 (see chart 1) and the fourth quarter of 2001 (see chart 2) and stayed positive until the next recession.

Real gross domestic product is projected to show an increase in the third quarter of 2009. Real gross domestic product is a quarterly estimate.

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Peter Schiff: Why this Money Should Replace the U.S. Dollar There’s a new universal currency, backed by solid gold. You can use it to make online purchases anywhere in the world. Converting some money to the new currency takes just 5 minutes. You can start with as little as $10…or as much as $10 million. According to CNBC star analyst and Euro Pacific Capital President Peter Schiff, this money could double the value of your savings – automatically – in just 6-9 months. For Schiff’s full analysis and recommendations, please go here.

U.S. GDP Contraction Slows, but the Road to Recovery Will Be Rocky

By Bob Blandeburgo
Associate Editor
Money Morning

While the many of the world’s economies continue to look for signs of growth, the U.S. economy took a big step in the right the direction in the second quarter.

U.S. gross domestic product (GDP) shrank 1% in the second quarter, …

Peter Schiff: Why this Money Should Replace the U.S. Dollar There’s a new universal currency, backed by solid gold. You can use it to make online purchases anywhere in the world. Converting some money to the new currency takes just 5 minutes. You can start with as little as $10…or as much as $10 million. According to CNBC star analyst and Euro Pacific Capital President Peter Schiff, this money could double the value of your savings – automatically – in just 6-9 months. For Schiff’s full analysis and recommendations, please go here.

While the many of the world’s economies continue to look for signs of growth, the U.S. economy took a big step in the right the direction in the second quarter.

U.S. gross domestic product (GDP) shrank 1% in the second quarter, following the first quarter’s 6.4% drop. The $787 billion Obama stimulus package, smaller decreases in business spending …

Do you remember the first time you saw a rain drenched Peter Finch scream, “I’m as mad as hell, and I’m not going to take this anymore!”? We do. We were too young to see Network in the cinema (the movie came out the year we were born: 1976). Instead, we watched it late one night on TV. And we’ll never forget the moment when Finch’s character, news anchor Howard Beale, arrives in the television studio in his tan raincoat with a deranged look on his face and begins to speak to camera.

I don’t have to tell you things are bad. Everybody knows things are bad. It’s a depression. Everybody’s out of work or scared of losing their job. The dollar buys a nickel’s worth; banks are going bust; shopkeepers keep a gun under the counter; punks are running wild in the street, and there’s nobody anywhere who seems ...

Today's GDP numbers were about what I was expecting. Although economic activity continued its sharp decline, if we continue to follow the script, things should improve.

The Bureau of Economic Analysis reported today that U.S. real GDP fell at a 6.1% annual rate in the first quarter of 2009. That's enough to push our Econbrowser Recession Indicator Index up to 99.5%, its highest value since 1980:Q2. This index uses the latest GDP numbers to form a retrospective impression of the economy's status as of one quarter earlier (2008:Q4). We will declare the recession to be over when the index falls back below 33%.

The plotted value for each date is based solely on information as it would have been publicly available and reported as of one quarter after the indicated date, with 2008:Q4 the last date shown on the graph. Shaded ...

In the currency market, the dollar gained against the euro. Late Friday, the euro was trading at $1.2668 vs. $1.2735 on Thursday.

“Today the dollar is once again emerging as the ultimate fantasy island survivor as more currency traders cast their votes against any remaining contenders,” said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Conn.

While Mr. Wilkinson’s comment is true for now, there’s no telling how long this will last given the expansion of the monetary base we’ve seen recently.

Now, here’s some economic news from Friday… and you probably guessed, it’s bad.

The nation’s economic slide during the last three months of 2008 was even sharper than previously estimated, with the broadest gauge of economic activity suffering its worst decline in 26 years, the government reported Thursday.

Gross domestic product, which measures the output of goods and services produced in the United States, fell at an annual rate

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Friday February 27, 2009 Navivest

Preliminary revisions to the U.S. Gross Domestic Product or GDP, for the fourth quarter of 2008, were worse than expected, after a decline of 6.2% against forecasts calling for a 5.4% decline, according to the Bureau of Economic Analysis.

The main culprit was personal consumption, which accounts for 70% of U.S. GDP. This fell by 4.3% in the period, against estimates of a 3.7% decline. Core personal consumption, which excludes food and energy, was revised up by two-tenths to 0.8%.

Falling exports were responsible for a decline of 0.46% declines sales of equipment and software was responsible for a 2.24% drop, while residential fixed investment added a 0.78% drop to the number. The only bright spot was government spending, which added 0.38%.

Tags: gdp  economy

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BEA: News Release: Gross Domestic Product

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 3.8 percent in the fourth quarter of 2008, (that is, from the third quarter to the fourth quarter), according to advance estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP decreased 0.5 percent.

Here’s how the year/year percentage change in GDP and in corporate equipment/software investment looks when charted.