GDP equals consumption plus investment plus government spending plus net exports. Consumer spending is the largest component in most developed economies, accounting for roughly 70% of American GDP.

Investment includes business purchases of equipment and new construction. Government spending covers everything from military budgets to teacher salaries. Net exports — what a country sells abroad minus what it imports — can be positive or negative.

Understanding these components reveals where economic strength and weakness live. When consumers pull back, the economy slows regardless of what other sectors do. When business investment drops, future productivity suffers.