How Do Consumers Believe the Pandemic Will Affect the Economy and Their Households?

Armantier, Olivier; Goldman, Leo; Koşar, Gizem; Lu, Jessica; Pomerantz, Rachel; Van der Klaauw, Wilbert

Discussion Paper

How Do Consumers Believe the Pandemic Will Affect the Economy and Their Households?

Abstract: In this post we analyze consumer beliefs about the duration of the economic impact of the pandemic and present new evidence on their expected spending, income, debt delinquency, and employment outcomes, conditional on different scenarios for the future path of the pandemic. We find that between June and August respondents to the New York Fed Survey of Consumer Expectations (SCE) have grown less optimistic about the pandemic’s economic consequences ending in the near future and also about the likelihood of feeling comfortable in crowded places within the next three months. Although labor market expectations of respondents differ considerably across fairly extreme scenarios for the evolution of the COVID pandemic, the difference in other economic outcomes across scenarios appear relatively moderate on average. There is, however, substantial heterogeneity in these economic outcomes and some vulnerable groups (for example, lower income, non-white) appear considerably more exposed to the evolution of the pandemic.

Keywords: pandemic; COVID-19; spending expectations; income expectations;

JEL Classification: D14;