Economics, Econometrics and Finance
3 years ago

Inflation expectations have limited impact on consumer spending, study finds.

SSRN Electronic Journal
Household Inflation Expectations and Consumer Spending: Evidence from Panel Data
Mary A. Burke, Ali K. Ozdagli

Paper Summary

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Household spending on durable goods goes up when people expect inflation to rise, but only for certain households. Spending on non-durable goods doesn't change with inflation expectations. Also, spending decreases when people expect unemployment to increase. This means that inflation expectations don't have a big impact on overall spending, especially if expectations for inflation and unemployment move in the same direction.