IMF Working Papers

Drivers of Post-COVID Private Consumption in the U.S.

By Mai Dao, La-Bhus Fah Jirasavetakul, Jing Zhou

June 21, 2024

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Mai Dao, La-Bhus Fah Jirasavetakul, and Jing Zhou. Drivers of Post-COVID Private Consumption in the U.S., (USA: International Monetary Fund, 2024) accessed October 13, 2024

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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.

Subject: Consumption, COVID-19, Health, Housing, Income, National accounts, Private consumption

Keywords: Consumption, Consumption growth, COVID recovery, COVID-19, Global, Household wealth, Housing, Housing wealth, Income, Pandemic consumption, Private consumption

Publication Details

  • Pages:

    33

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2024/128

  • Stock No:

    WPIEA2024128

  • ISBN:

    9798400281044

  • ISSN:

    1018-5941