Keynes-Clower-Wu's Income Growth Theory provides a "new" consumption theory result, combining theory and empirical evidence. In contrast, previous Nobel prize economists in this field, '85 Modigliani, '76 Milton Friedman (1957), '95 Robert Lucas, '15 Angus Deaton, and '26 Robert Hall (1978), have all failed to provide a scientific theory on short and long-term consumption behavior, most importantly overconsumption and dissaving. In addition, their work cannot explain why households in a higher saving country can suddenly start saving less, a yo-yo effect, and vice versa. This inability to explain (and forecast) personal saving reflects the need for a better consumption theory. With the analysis of factors affecting employment and labor income growth, it is possible to prove through a microfoundation optimization that changes in savings are the direct consequence of forecasting error of future income and its "optimal" consumption. In practice, based on Income Growth Theory, there is a way to understand the relationship between the effects of trade and saving, and, from 1960 to 2024, the outcome of the U.S. presidential election in 14 out of 16 (87.5%) times, showing a high correlation between a single economic variable, farm income, and the election result.

The following chart will show some of the issues we will discuss: