Drivers of Post-COVID Private Consumption in the U.S.
IMF Working Papers, June 21, 2024
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- Drivers of Post-COVID Private Consumption in the U.S.
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Bibliographic details
- Authors: Mai Dao, La-Bhus Fah Jirasavetakul, Jing Zhou
- Published: June 21, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400281044.001
Summary of core findings
- Private consumption in the U.S. recovered swiftly from the pandemic trough and has been running above the pre-pandemic trend even as interest rates rose sharply.
- Using both state- and household-level data, the analysis identifies three main contributors to strengthened post-pandemic consumption:
- Excess savings accumulated during the pandemic.
- Large increases in household wealth, especially housing wealth.
- Solid real income gains.
- The paper finds that, compared with pre-COVID estimates, the marginal propensity to consume out of housing wealth is substantially higher.
- Large gains in housing prices, together with the elevated marginal propensity to consume out of housing wealth, made the wealth effect a key driver for post-pandemic consumption growth.
Methodology and data scope
- Empirical approach: analysis based on both state-level and household-level data (methods and detailed estimations are presented in the working paper).
- Focus areas: consumption dynamics, household wealth (with emphasis on housing), excess savings, real income.
Thematic subjects and keywords
- 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
Notable exact statements from the paper
- "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."
- "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."
IMF Working Paper: Drivers of Post-COVID Private Consumption in the U.S., Working Paper No. 2024/128 (June 21, 2024) — Mai Dao, La-Bhus Fah Jirasavetakul, Jing Zhou.
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