Everyone spends

1Their week

Saturday, Maya buys groceries, gets a haircut and meets a friend for dinner. Jordan drives his new car to work.

None of that feels like economics. But the money they spend becomes someone else's income.

2How it works

One person's spending is another person's income. The $40 Maya pays for a haircut becomes part of the stylist's pay. The stylist spends some of it on lunch, which pays the cook. Money keeps moving, and every time it changes hands, someone earns a living.

Consumers are the biggest engine. In the US, what households spend on goods and services (consumer spending) makes up about two-thirds of GDP (gross domestic product), the total value of the finished goods and services produced in the US, according to the BEA (Bureau of Economic Analysis), the government agency that measures it.

Spending and jobs feed each other. When people spend more, businesses sell more and often hire more. More jobs mean more paychecks, and more paychecks mean more spending. It works in reverse too: when people pull back, sales slow, hiring slows, and paychecks get tighter.

GDP is the scorecard. Every three months, the BEA publishes a first estimate of GDP, then updates it as more data comes in. Headlines usually give GDP as an "annualized" rate: how fast the economy would grow over a full year if it kept up that quarter's pace.

3It really happened