Inconvenient Truths

Consumer Spending during Unemployment: Positive and Normative Implications

“…The final 29 percent of outflows cannot be categorized because they are either paper checks or electronic payments that could not be categorized. 9 We compare spending levels in the JPMCI data to external benchmarks in order to evaluate the fraction of household spending that is captured by the JPMCI data. For this analysis, we use the crosswalk to the Consumer Expenditure (CE) Survey described above, and we also crosswalk to the Bureau of Economic Analysis's Personal Consumption Expenditures (PCE).…”

“…We calculate π j , the fraction of time that households are in each state, using our estimates of the job-finding hazards reported in Figure 6. Equation (1) in SvW implies that, in this environment, the welfare gain of a benefit level increase can be approximated as (9) dW…”

“…We treat all cash withdrawals as nondurable spending because the Federal Reserve's Diary of Consumer Payment Choice (DCPC) shows that 75 percent of cash is spent on nondurables. See online Appendix C for an explanation of the "miscellaneous nondurables" category, which accounts for 5 percent of checking outflows 9. In a robustness check in online Appendix E.1, we construct a measure of nondurable spending which assumes that all uncategorized spending (including cash) is spent on nondurables in proportion to that payment method's nondurable expenditure share in the DCPC 10.…”