Sofoklis Goulas

Economist

Sofoklis Goulas

Economist

Blog Post

Deteriorating household finances will not support strong spending

Deteriorating household finances will not support strong spending

In recent years, household finances have fluctuated amid large swings in federal income support and the stock market, a surge in inflation, and strong consumer spending. As documented by The Hamilton Project, household balance sheets at the end of 2021 were stronger than would have been expected before the pandemic. However, this Economic Analysis explains how household balance sheets have deteriorated in some respects since then. Moreover, an examination of household finances for different demographics (age, race and ethnicity, and income) shows that the deterioration in finances has been faster for nonwhite and lower income households. The current state of household finances does not support continued strong consumer spending, and leaves households at a crossroads if recent trends in finances continue: they can either moderate their spending or become more indebted.


Co Authors : Wendy Edelberg
Outlet : Brookings Institution
Featured in :

Bloomberg (1), Bloomberg (2), Bloomberg (3)