The U.S. Economic Growth Factors by Using Regression Analysis

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Paik, Songyi
Regression Analysis , Consumer Spending , GDP , Economic Growth
This paper analyzes which factors affect consumer expenditure, by using regression analysis, and these components should be considered by the U.S. government to promote economic growth. Because consumer spending is one of the most important components of gross domestic product (GDP), examining the factors of consumer spending indicates various ways to improve the economy. If the government notices economic downturn, they can target factors to activate domestic economy. While studying the GDP components in macro economics, there was one interesting feature that the United States has the higher marginal propensity to consume than other countries. Considering consumer spending accounts for two-thirds of U.S. economic activities, the high marginal propensity to consume contributes to the development of the U.S. domestic market and economic growth. There are several possible independent variables to affect consumption expenditures: personal income, interest rates, housing prices, and stock assets. In Council of Economic Advisers report, “The Economy in 2014”, it says consumer spending increased because of the consumer high sentiment with real wages rising, declining gasoline prices, and employment expectations. Based on these potential variables, this project examines which factors are useful to explain the changes in consumer spending. Moreover, how U.S. government can manage them to achieve the continuous economic growth.