Drivers of Post-COVID Private Consumption in the U.S.
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Summary:
Private consumption in the U.S. has recovered swiftly from the pandemic trough and has been running above the pre-pandemic trend even as interest rates rose sharply. This paper examines the underlying drivers for this strong growth in consumption. Using both state- and household-level data, we find that excess savings from the pandemic, large increases in household wealth (especially housing), along with solid real income gains contributed to strengthening post-pandemic consumption. Compared with pre-COVID estimates, the marginal propensity to consume out of housing wealth is substantially higher, which, together with large gains in housing prices, made the wealth effect a key driver for post-pandemic consumption growth.
Series:
Working Paper No. 2024/128
Subject:
Consumption COVID-19 Health Housing Income National accounts
Frequency:
regular
English
Publication Date:
June 21, 2024
ISBN/ISSN:
9798400281044/1018-5941
Stock No:
WPIEA2024128
Format:
Paper
Pages:
33
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