U.S. Consumption after the 2008 Crisis

Jaewoo Lee, Pau Rabanal and Damiano Sandri

No 2010/001, IMF Staff Position Notes from International Monetary Fund

Abstract: U.S. household consumption declined sharply in late 2008, marking a departure from the trend of a steady increase in U.S. consumption as a share of income since the 1980s. Combining econometric and simulation analysis, we estimate that this departure will be sustained beyond the crisis: the U.S. household consumption rate will likely decline somewhat further from its current level, as the saving rate rises to around 6 percent of disposable personal income (from nearly 5 percent in 2009). Compared to the pre-crisis years (2003–07), this saving rate implies a decline in U.S. private-sector demand on the order of 3 percentage points of GDP.

Keywords: SPN; rate; consumption rate; saving; saving rate; aggregate consumption; rate residual; consumption expenditure; Consumption; Personal income; Disposable income; Vector autoregression; Global (search for similar items in EconPapers)
Pages: 23
Date: 2010-01-15
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Citations: View citations in EconPapers (4)

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