The Surprisingly Restrained U.S. Consumer: A Source of Stability for the Global Economy?

PGIM Fixed Income

November 2018

Nathan Sheets, PhD, Chief Economist and Head of Global Macroeconomic Research, and George Jiranek, Analyst, Global Macroeconomic Research

With the recent 10-year anniversary of Lehman Brothers’ failure, it’s useful to step back and assess how the global economy and financial system are different than they were a decade ago. In this paper, we examine a difference that has powerful implications for economic performance. Specifically, one seismic shift since the crisis has been a sustained retrenchment by U.S. consumers. Many of the imbalances before the crisis have been reversed. We also document that in recent years the U.S. household saving rate has been higher than historical relationships suggest, and household indebtedness has been significantly lower.




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