The Rise and Fall of Consumption in the 2000s

Yuliya Demyanyk, Dmytro Hryshko, Maria Luengo-Prado and Bent E. Sorensen

No 1507, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: U.S. consumption has gone through steep ups and downs since the turn of the millennium, but the causes of these fluctuations are still imperfectly identified. We quantify the relative impact on consumption growth of income, unemployment, house prices, credit scores, debt, expectations, foreclosures, inequality, and refinancings for four subperiods: the ?dot-com recession? (2001-2003), the ?subprime boom? (2004-2006), the Great Recession (2007-2009), and the ?tepid recovery? (2010-2012). We document that the explanatory power of different factors varies by subperiods, implying that a successful modeling of this decade needs to allow for multiple causal determinants of consumption.

Keywords: consumption growth; wealth effects; income inequality; debt overhang; consumer credit; consumer expectations; foreclosures; cash-out refinancing; dot-com recession; subprime boom; Great Recession; tepid recovery (search for similar items in EconPapers)
JEL-codes: E21 E24 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2015-05-21
New Economics Papers: this item is included in nep-mac and nep-ure
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