Spending

Spending, in economics, is the money paid out for goods and services. When economists talk about spending by households on food, rent, transport and other needs, the technical term is consumption, which is where the full explanation sits. The everyday sense is wider and covers any outlay of money by a person, firm or state.

National accounts split total spending into four parts: household consumption, business investment, government spending and net exports. Together they make up aggregate demand and the expenditure measure of GDP, and household consumption is the largest of the four in most economies. Whatever part of disposable income a household does not spend is its saving, so changes in spending and saving always move as a pair.