Consumption is the main source of growth
Consumption (rather than savings/investment) is the source of economic growth. Surely that's obvious?
If we say that aggregate demand, shifts to the right and if there is spare capcity then the economy grows (rather than having demand pull inflation.)
What are the components of aggregate demand?
1. Consumption (C = f(Y))
2. Government spending
4. Net exports
If consumption increases then there will be an increase in investment (accelerator) and thus that injection in turn will create an increase in national income (multiplier) and thus growth.
UNLESS all the consumption is on imports, an increase in consumption will shift AD to the right (ceteris paribus).
If savings increase then demand falls (paradox of thrift). Thus if savings fall (consumption increases) there is growth.
Firms will not invest if they do not anticipate demand so without consumption, no investment.
Consumers consume and pay taxes. Taxes are revenue for government from which comes government spending. Without revenue (unless they borrow) governments cannot spend.
Thus consumption is needed.
Exports are to...people who consume.
Thus consumption is the main source of growth.