Using novel survey evidence on consumer inflation expectations disaggregated by personal consumption expenditure (PCE) categories, we document the paradox that consumers' aggregate inflation expectations usually exceed any individual category expectation. We explore procedures for aggregating category inflation expectations, and find that the inconsistency between aggregate and aggregated inflation expectations rises with subjective uncertainty and is systematically related to socioeconomic characteristics. Overall, our results are inconsistent with the notion that consumers' aggregate inflation expectations comprise an expenditure-weighted sum of category beliefs. Moreover, aggregated inflation expectations explain a greater share of planned consumer spending than aggregate inflation expectations.
Subjective mortality beliefs affect pre- and post-retirement consumption and savings decisions, as well as portfolio allocation. New survey evidence shows that individuals overestimate their mortality at short horizons and survival rate at long horizons.
The COVID-19 vaccination drive raises questions about the trajectory of the economic recovery and the pandemic’s impact on consumers’ longer-term behaviors. In this Commentary, we examine the evolution of consumers’ expectations for their post-crisis spending on services that have been dramatically curtailed by the pandemic: visiting restaurants, bars, and hotels, using public transportation, and attending crowded events. We document a U-shaped pattern of expected future use of these services, with growing pessimism in summer 2020 that had largely reversed by fall 2020—for most groups. More recently, higher-income individuals have indicated that they expect to sharply increase their use of these services compared with their pre-pandemic behaviors, but there has been a notable scarring of expectations among older Americans.
Masks or cloth face coverings have the potential to help reduce the spread of COVID-19 without greatly disrupting economic activity if they are widely used. To assess the state of mask wearing, we surveyed US consumers about their recent and prospective mask-wearing behavior. We find that most respondents are wearing masks in public but that some respondents are less likely to follow social-distancing guidelines while doing so, indicating a potential tradeoff between two of the recommended methods that jointly reduce coronavirus transmission. While most respondents indicated that they were extremely likely to wear a mask if required by public authorities, the reported likelihood is strongly dependent on age and perceived mask efficacy.
We summarize the results from an ongoing survey that asks consumers questions related to the recent coronavirus outbreak, including their expectations for how the economy is likely to be affected by the outbreak and how their own behavior has changed in response to it. The survey began in early March, providing a window into how consumers’ responses have evolved in real time since the early days of the acknowledged spread of COVID-19 in the United States. In updating and charting the survey’s findings on the Cleveland Fed’s website going forward, we seek to inform policymakers and researchers about consumers’ beliefs during a time of high uncertainty and unprecedented policy responses.