Dynamics and asymmetries between consumer sentiment and consumption in pre- and during-COVID-19 time: Evidence from the US

J Econ Asymmetries. 2021 Nov:24:e00227. doi: 10.1016/j.jeca.2021.e00227. Epub 2021 Sep 23.

Abstract

We study the dynamic relationships between consumer expenditures and consumer sentiment in the pre- and during the COVID-19 periods. Our results indicate that sentiment is closely related to consumption as consumers seem to maintain a long memory of the impact of sentiment during the period of the pandemic relative to the pre-pandemic period. We also found asymmetric behavior of consumption growth with and without the influence of sentiment during each sub-period. We offer some specific policy implications that are beneficial to the US economy and other countries.

Keywords: Asymmetry; COVID-19; Consumer sentiment; Consumer spending; VAR; Volatility.