Negative Sentiment toward Spending and Declining Real Incomes May Meaningfully Lower Consumption

Nida Cakir Melek and Emily Pollard

Economic Bulletin, 2022, issue November 4, 2022, 4

Abstract: Despite a contraction in real GDP in the first half of 2022, consumer spending has remained resilient. We examine a set of factors that have historically affected consumption growth and find that excess savings have boosted consumer spending during the COVID-19 pandemic. However, as excess savings decline and economic relationships normalize, negative sentiment toward spending and declining real incomes may meaningfully lower consumption.

Keywords: consumers; consumption; pandemic; savings (search for similar items in EconPapers)
JEL-codes: E20 E21 (search for similar items in EconPapers)
Date: 2022
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