Michael McMain

Economic Commentaries

• Economic Commentary

  Understanding Which Prices Affect Inflation Expectations

  Chris Campos Michael McMain Mathieu Pedemonte
  04.19.2022 | EC 2022-06
  Inflation expectations have an impact on one’s economic behavior. We show that the inflation expectations of professional forecasters and consumers are predicted by very different prices. While professional forecasters weigh prices similar to the consumer price index, consumers seem to focus on prices they see more often, such as those for food and new vehicles. These are also prices that have seen disproportionally high volatility since the onset of the pandemic. We argue that heterogeneity in the importance of component-specific inflation can have relevant economic implications and disproportionate effects on consumers’ inflation expectations that can, in turn, affect economic behavior.
  
  Topics: Inflation, Econometrics modeling and forecasting
  
• Economic Commentary

  Expected Post-Pandemic Consumption and Scarred Expectations from COVID-19

  Edward S. Knotek II Michael McMain Raphael S. Schoenle Alexander M. Dietrich Kristian Ove R. Myrseth Michael Weber
  04.12.2021 | EC 2021-11
  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.
  
  Topics: Public health crises, Economic growth