How economic crises affect inflation beliefs: Evidence from the COVID-19 pandemic

Arbeitspapier

This paper studies how inflation beliefs reported in the New York Fed's Survey of Consumer Expectations have evolved since the start of the COVID-19 pandemic. We find that household inflation expectations responded slowly and mostly at the short-term horizon. In contrast, the data reveal immediate and unprecedented increases in individual inflation uncertainty and in inflation disagreement across respondents. We find evidence of a strong polarization in inflation beliefs and we show differences across demographic groups. Finally, we document a strong link, consistent with precautionary saving, between inflation uncertainty and how respondents used the stimulus checks they received as part of the 2020 CARES Act.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Staff Report ; No. 949

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Macroeconomics: Consumption; Saving; Wealth
• Subject: inflation expectations ; inflation uncertainty and disagreement ; COVID-19 pandemic

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Armantier, Olivier ; Koðsar, Gizem ; Pomerantz, Rachel ; Skandalis, Daphné ; Smith, Kyle ; Topa, Giorgio ; van der Klaauw, Wilbert
• Event: Veröffentlichung
• (who): Federal Reserve Bank of New York
• (where): New York, NY
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/241142
• Last update: 10.03.2025, 11:43 AM CET