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The Expected, Perceived, and Realized Inflation of U.S. Households before and during the COVID-19 Pandemic

Michael Weber (), Yuriy Gorodnichenko and Olivier Coibion

No 15027, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: As the pandemic spread across the U.S., disagreement among U.S. households about inflation expectations surged along with the mean perceived and expected level of inflation. Simultaneously, the inflation experienced by households became more dispersed. Using matched micro data on spending of households and their macroeconomic expectations, we study the link between the inflation experienced by households in their daily shopping and their perceived and expected levels of inflation both before and during the pandemic. In normal times, realized inflation barely differs across observable dimensions but low income, low education, and Black households experienced a larger increase in realized inflation than other households did. Dispersion in realized and perceived inflation explains a large share of the rise in dispersion in inflation expectations.

Keywords: inflation expectations; COVID-19; surveys (search for similar items in EconPapers)
JEL-codes: E02 E03 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2022-01
New Economics Papers: this item is included in nep-mac and nep-mon
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Working Paper: The Expected, Perceived, and Realized Inflation of U.S. Households before and during the COVID19 Pandemic (2022) Downloads
Working Paper: The Expected, Perceived, and Realized Inflation of U.S. Households before and during the COVID19 Pandemic (2022) Downloads
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