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Discussion Paper
Supply vs Demand Factors Influencing Prices of Manufactured Goods
The strong surge and rapid retreat of U.S. goods price inflation during 2021-2023 has occupied the forefront of economic policy discussions, and debate on the primary causes continues. Some commentators point to widespread supply bottlenecks and adverse geo-political events that caused significant disruption to the production and availability of manufactured goods.
Discussion Paper
A Better Way of Understanding the US Consumer: Decomposing Retail Sales by Household Income
Changes in retail spending reflect changes in consumer demand for goods. For the past several months, retail sales estimates published by the Census Bureau have indicated that consumer demand for retail goods remains resilient. However, published measures do not provide details on which consumers’ spending has remained resilient. Using a detailed micro dataset, we construct a measure of average retail spending for low-, middle- and high-income households.
Working Paper
Lost in Aggregation: Geographic Mismeasurement of Income and Spending
Using zip-code median income as a proxy for household income is common in economics but can mask heterogeneity and yield misleading conclusions. Using zip-code median income and self-reported household incomes from a representative panel of 150,000 U.S. households, we decompose average retail spending for 2018-2024. When using self-reported incomes, we observe substantial divergence in spending between low- and high-income households starting in mid-2021. When using zip-code aggregates as a proxy, this divergence disappears. Our findings indicate a 35 to 75 percent discrepancy between ...
Discussion Paper
Tracking consumer sentiment versus how consumers are doing based on verified retail purchases
Despite low unemployment, moderating inflation and anchored inflation expectations, and rising incomes since mid-2022, surveys at the end of 2024 continued to report that consumer sentiment remained unusually low, below levels at the onset of the pandemic and on par with levels during the Great Financial Crisis. Why was there this discrepancy between consumer sentiment and the real economy?