Monetary policy has a more significant impact on spending of U.S. households headed by white women than on those led by white men or Black men and women, the Federal Reserve Bank of San Francisco said.

White households overall in the three years after an unexpected rate hike, Aina Puig, a research scholar with the San Francisco Fed, said in an economic letter
published Monday. 

Changes in spending for the other cohorts were minimal, which could be explained by differences in wealth, occupation and economic well-being.

“The group of households that have mortgages and are headed by white women is the only group that considerably cuts back on durable spending,” Puig wrote. “Black households reduce their spending on everyday goods and services more than white households, but not their spending on durable goods.”

The Fed has increased interest rates by 2.25 percentage points this year as it tries to slow the fastest inflation in four decades that’s fueled by strong consumer spending and pandemic supply-chain problems. Policymakers are watching to see if their actions lead to a reduction in consumer demand and if that feeds through to lower prices.

In recent years, the Fed has also indicated that it is more closely watching how its policy impacts Americans differently, especially along racial and gender lines.
Spending differences among groups likely reflect individual preferences for what to buy and when to do so, Puig wrote.

“These preferences may in part be due to income and wealth differences across groups, with some being more constrained than others in their spending,” Puig wrote.

A majority of female-led households have no spouse, compared with 38% of households headed by men. Black households may not see a significant change in spending in an environment of interest rate increases because of “systemic racial inequalities in access to financial information, mortgaging refinancing options, and appropriate housing valuations,” Puig wrote.