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Working Paper
A concise test of rational consumer search
Sorensen, Bent E.; Luengo-Prado, Maria Jose; Lee, Chloe (2018-06-18)
A simple model of time allocation between work and price-search predicts that consumers spend relatively more time searching for better prices for goods of which they consume relatively more. Using scanner data, we confirm empirically that consumers pay lower (higher) prices for goods that they buy more (less) of than other consumers. Our results are conservative, because we compare goods that are defined as narrowly as possible by UPC codes, and provide a lower bound for the savings obtained from bargain hunting.
Working Papers , Paper 18-4

Discussion Paper
Spending Down Pandemic Savings Is an “Only-in-the-U.S.” Phenomenon
Klitgaard, Thomas; Higgins, Matthew (2023-10-11)
Household saving soared in the United States and other high-income economies during the pandemic, as consumers cut back on spending while government policies supported incomes. More recently, saving behavior has diverged, with the U.S. saving rate dropping below its pre-pandemic average while saving rates elsewhere have remained above their pre-pandemic averages. As a result, U.S. consumers have been spending down the “excess savings” built up during the pandemic while the excess savings abroad remain untapped. This divergent behavior helps explain why U.S. GDP has returned to its ...
Liberty Street Economics , Paper 20231011

Working Paper
On the Distributional Effects of International Tariffs
Carroll, Daniel R.; Hur, Sewon (2023-02-13)
We provide a quantitative analysis of the distributional effects of the 2018 increase in tariffs by the US and its major trading partners. We build a trade model with incomplete asset markets and households that are heterogeneous in their age, income, wealth, and labor skill. When tariff revenues are used to reduce distortionary taxes on consumption, labor, and capital income, the average welfare loss from the trade war is equivalent to a permanent 0.1 percent reduction in consumption. Much larger welfare losses are concentrated among retirees and low-wealth households, while only wealthy ...
Working Papers , Paper 20-18R2

Speech
U.S. Economic Outlook
Moskow, Michael H. (2007-02-16)
Remarks by Michael H. Moskow President and Chief Executive Officer Federal Reserve Bank of Chicago. University Club of Chicago - Learn at Lunch Lecture - 76 E. Monroe St., Chicago, IL. A speech delivered on February 16, 2007 in Chicago, Illinois.
Speech , Paper 7

Report
Stimulus through Insurance: The Marginal Propensity to Repay Debt
Koşar, Gizem; Melcangi, Davide; Pilossoph, Laura; Wiczer, David (2023-06-01)
Using detailed micro data, we document that households often use “stimulus” checks to pay down debt, especially those with low net wealth-to-income ratios. To rationalize these patterns, we introduce a borrowing price schedule into an otherwise standard incomplete markets model. Because interest rates rise with debt, borrowers have increasingly larger incentives to use an additional dollar to reduce debt service payments rather than consume. Using our calibrated model, we then study whether and how this marginal propensity to repay debt (MPRD) alters the aggregate implications of fiscal ...
Staff Reports , Paper 1065

Consumption concentration may be up, adding slightly to economic fragility
Hoham, Benjamin; Yang, Fang (2025-11-25)
Analysts have taken notice of the large share of total U.S. spending attributable to the very highest earners. The concerns are that the emergence of K-shaped growth—bifurcated activity at an elevated rate among high earners and much more restrained among most others—may put the U.S. in greater economic peril.
Dallas Fed Economics

Working Paper
Consumption Heterogeneity by Occupation: Understanding the Impact of Occupation on Personal Consumption during the COVID-19 Pandemic
Cotton, Christopher D.; Garga, Vaishali; Rohan, Justin (2020-12-01)
This paper exploits the variation in the unemployment rate of different occupations in the first part of the COVID-19 pandemic to analyze the response of consumption spending to unemployment risk. We find that earlier in the pandemic, higher unemployment risk did not reduce relative spending. However, as the pandemic proceeded, higher unemployment risk reduced relative spending. This pattern held across both essential and nonessential spending categories. We find that “high-risk” occupations had three common characteristics: lower ability to be performed from home, higher physical ...
Working Papers , Paper 20-16

Strength in consumer spending does not necessarily imply low probability of recession
Richter, Alexander W.; Zhou, Xiaoqing (2024-01-02)
Consumption was not a main driver of GDP declines in previous recessions, and a recession is not necessarily preceded by declines in consumer spending.
Dallas Fed Economics

Working Paper
Real Wage Growth at the Micro Level
Harding, Elisabeth; Gregory, Victoria (2023-07)
This paper investigates patterns in real wage growth in 2022 to determine whether wages have kept up with rising price levels, and how this differs among labor market participants. Using the CPS for wages and imputing expenditure data from the CEX, we measure separately nominal wage growth and inflation rates at the micro level. We find that there is more heterogeneity in the former, meaning that when we combine them, an individual’s real wage growth is primarily driven by their nominal wage growth. In 2022, 57% of individuals experienced negative real wage growth, with older and less ...
Working Papers , Paper 2023-024

Report
What would you do with $500? Spending responses to gains, losses, news, and loans
Kaplan, Greg; Fuster, Andreas; Zafar, Basit (2018-03-01)
We use survey questions about spending to investigate features of propensities to consume that are useful for distinguishing between consumption theories. Asking households about their intended spending under various scenarios, we find that 1) responses to unanticipated gains are vastly heterogeneous (either zero or substantially positive), 2) responses to losses are much larger and more widespread than responses to gains, and 3) even those with large responses to gains do not respond to news about future gains. These three findings suggest that limited access to disposable resources is an ...
Staff Reports , Paper 843

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