Critical Issues
U.S. Retail Sales: Is the Back to School Spending Season Looking Any Better?
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U.S. Consumer Credit: Banks Ease Some Lending Standards; Demand Still Contracting on Net
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U.S. Consumer Spending: Set For a Weak H2 2010?
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U.S. Consumers: Confidence Continues to Collapse
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U.S. Households: A Transition to a Higher Savings Rate?
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U.S. Household Income, Net Worth and Consumption: How Unequal is the Distribution?
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U.S. Income Inequality: What Are the Causes, and How to Address the Problem?
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U.S. Tax Reforms: What are the Implications for Income Redistribution?
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Is the U.S. Middle Class Facing Increased Economic Insecurity?
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Background:
From the early 1990s until the recent financial crisis, U.S. consumer spending rose faster than income, buoyed by easy credit conditions, the wealth effects of rising house prices and returns from financial markets. However, the erosion of housing and financial-sector wealth driven by the financial crisis that began in 2007, and the millions of job losses resulting from the ensuing recession brought about a severe retrenchment in consumer spending. The fiscal stimulus package, including initiatives like the “cash for clunkers” program, helped to boost consumer spending in 2009. However, as the effects of the stimulus support fade, protracted weakness in the labor market, reduced consumer credit availability and a possible climb in the savings rate as households attempt to deleverage and increase their net worth are likely to dampen a self-sustained recovery. Given that consumption accounts for around 70% of U.S. GDP, slow consumption growth has huge implications for the wider U.S. economy, as well as the global recovery.
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Associated Readings
Research
Federal Reserve
Alan Greenspan and James Kennedy
March 2007
Sources and Uses of Equity Extracted from Homes
Analysis
Morgan Stanley
Richard Berner and David Cho
May 29, 2009
Deleveraging the American Consumer
Analysis
Federal Reserve Bank of San Francisco
Reuven Glick and Kevin J. Lansing
May 15, 2009
U.S. Household Deleveraging and Future Consumption Growth
Analysis
Wachovia
John E. Silvia
Apr 03, 2009
The Changing Nature of Saving
Analysis
McKinsey
Susan Lund and Charles Atkins
March 2009
The economic impact of increased US savings
Blogs
Nouriel Roubini's Global EconoMonitor
Jul 17, 2008
American Un-Beauty: The Crisis of the Suburbian (McMansions and Gas-Guzzling SUVs) Way of Life
Research
CEPR Center for Economic and Policy Research
Dean Baker and David Rosnick
July 2008
The Impact of the Housing Crash on Family Wealth
Analysis
Federal Reserve Bank of San Francisco
Jun 27, 2008
US: Consumer Sentiment and Consumer Spending
