Expected Income Growth and the Great Recession

16 Pages Posted: 29 Jan 2014

See all articles by Eric French

Eric French

Department of Economics; Institute for Fiscal Studies (IFS)

Taylor Kelley

Federal Reserve Bank of Chicago

An Qi

Federal Reserve Bank of Chicago

Date Written: March 1, 2013

Abstract

Consumers’ expected income growth declined significantly during the Great Recession. It was the most severe drop ever observed in these data, and expectations have not yet fully recovered. Furthermore, this article shows that expected income growth is a strong predictor of actual future income and consumption growth.

Keywords: consumer expectations, consumption, forecasting

JEL Classification: C53, E37, E21, E17

Suggested Citation

French, Eric and Kelley, Taylor and Qi, An, Expected Income Growth and the Great Recession (March 1, 2013). Economic Perspectives, Vol. 37, No. 1, 2013, Available at SSRN: https://ssrn.com/abstract=2386032

Eric French (Contact Author)

Department of Economics ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Taylor Kelley

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

An Qi

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

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