If consumer demand falters, that will have two other multiplier effects. The first is that businesses will reduce their investment. Businesses typically invest when they feel that demand is rising. Increased unemployment, combined with lower levels of government and business spending, will instead cause aggregate demand to fall. If business investment falls, that will have further impacts on unemployment. This will create a negative feedback loop -- a multiplier effect in the wrong direction for the U.S. economy.
Additionally, when consumers and businesses are spending less, the government will receive fewer taxes. That will cause government to spend less, one would like to think, again continuing the multiplier effect and driving GDP down so far that we enter a recession.
The one interesting thing is that such a scenario would likely see imports decrease because fewer people and businesses...
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