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Discussion Paper
A Not-So-Great Recovery in Consumption : What is Holding Back Household Spending?
Historically, aggregate consumption has closely tracked disposable personal income, government transfers, and household net wealth. In this note, we show that this empirical relationship has broken down in recent years and explore potential explanations for why consumers--at least in the aggregate--may not be spending in line with recent income and wealth gains.
Discussion Paper
The Unusual Composition of Demand during the Pandemic
In most recessions, household spending on goods—particularly durables—and housing tends to fall sharply and remain weak for many quarters. In contrast, services spending has generally responded little to business cycles. This time, however, the opposite has occurred, as shown in Figure 1.
Discussion Paper
How Much Does Home Equity Extraction Matter for Spending?
In this note, we investigate recent trends in home equity extraction and how these trends may have impacted household spending and residential improvements. Home equity extractions—which rose and fell with house prices in the 1990s and 2000s—have remained sluggish in the recovery despite low interest rates and gains in home equity. Compared to the mid-2000s, equity extractions have fallen especially among younger households and those with lower credit scores and higher leverage, suggesting that mortgage credit supply is likely tighter than before the recession, at least for portions of ...
Discussion Paper
Living at Home Ain't Such a Drag (on Spending): Young Adults' Spending In and Out of Their Parents' Home
In this Note, we quantify the net change in annual spending by a young adult who has just moved out of her parents' home.
Discussion Paper
The Effect of Hurricane Matthew on Consumer Spending
In this note, we take a step forward in this regard using a new dataset of transaction volumes to examine how consumers reacted to Hurricane Matthew, which struck the East Coast in October 2016.
Discussion Paper
The Effect of Sales-Tax Holidays on Consumer Spending
Over the past decade, many U.S. states have enacted policies that temporarily exempt consumer purchases of certain goods from state sales taxes. In this note, we investigate whether the pre-announced sales-tax holidays noticeably alter the spending behavior of consumers. Specifically, we investigate whether there are shifts in the level and/or composition of consumer spending before, during, and after these sales-tax holidays.
Working Paper
Homeowner Balance Sheets and Monetary Policy
This paper empirically identifies an important channel through which monetary policy affects consumer spending: homeowner balance sheets. A monetary loosening increases home values, thereby strengthening homeowner balance sheets and stimulating household spending due to a combination of collateral and wealth effects. The magnitude of these effects on a given household depends on local housing market characteristics such as local geography and regulation. Cities with the largest geographic and regulatory barriers to new construction see 3-4 percent responses in real house prices compared with ...
Discussion Paper
Do Lower Gasoline Prices Boost Confidence?
A gallon of gasoline currently costs one third less than it did last summer.
Working Paper
From Transactions Data to Economic Statistics: Constructing Real-time, High-frequency, Geographic Measures of Consumer Spending
Access to timely information on consumer spending is important to economic policymakers. The Census Bureau's monthly retail trade survey is a primary source for monitoring consumer spending nationally, but it is not well suited to study localized or short-lived economic shocks. Moreover, lags in the publication of the Census estimates and subsequent, sometimes large, revisions diminish its usefulness for real-time analysis. Expanding the Census survey to include higher frequencies and subnational detail would be costly and would add substantially to respondent burden. We take an alternative ...
Discussion Paper
High-frequency Spending Responses to the Earned Income Tax Credit
Many households face large, high-frequency changes in income and have limited financial buffers to smooth their consumption through this income volatility. However, few studies have quantified spending responses to such timing shifts in income due to a lack of high-frequency spending data. We use a new dataset of anonymized daily, state-level spending to study a two-week delay in federal tax refunds with an earned income tax credit (EITC) in 2017.