(UM11-10) - The Effects of the Financial Crisis on Actual and Anticipated Consumption
Michael Hurd and Susann Rohwedder
According to survey results from the American Life Panel (ALP), about 75% of households reduced spending because of the financial crisis. While an important indicator of behavior, this figure does not tell us the magnitude of the reduction. In this project, we will use data from five waves of the Consumption and Activities Mail Survey (CAMS) to quantify the reduction in total consumption and in specific categories of consumption, and to find the variation in the amount of the reduction over important subpopulations. In particular, we will compare consumption changes between 2007 and 2009 with consumption changes over prior years cross-classified by risk factors. We will also use panel data on anticipated changes in spending at retirement to quantify the effects of the financial crisis on well-being in retirement via a difference-in differences approach.