Daily Consumer Expenditures and Income: New Evidence from a Payment Diary

This paper demonstrates that unique daily consumption and income transactions data derived from the Diary of Consumer Payment Choice (DCPC) produced unplanned benefits: they cover high percentages of U.S. data, forecast well in real time, offer new insights to payday and pay-cycle effects, and suggest selection effects in convenience samples of transactions data. Relative to other transactions data, DCPC data are more representative, publicly available, and offers other advantages. Daily data more clearly exhibit three explicit features largely absent from lower frequencies: 1) discrepancy between consumption and expenditures; 2) discrete expenditures and income; and 3) asynchronous consumer expenditures (daily) and income receipts (weekly or less). A novel daily VAR model with income, expenditures, and the real interest rate reveals significant negative (positive) consumption responses to rate (income) shocks that are absent from monthly PCE data. Expanding and improving the DCPC would increase its public good value.