Williams cites New York Fed research showing higher-income households and homeowners had substantially stronger consumption growth than lower-income renters.
“Research by New York Fed economists found that over recent years, higher-income households and homeowners have experienced substantially stronger consumption growth than lower-income households and renters.”
Williams explains the perverse result comes from wealth effects and higher rates leading households to consume more and work less.
“This “perverse” result, in the words of John Campbell (1994), 5 stems from the combination of a strong wealth effect and higher expected real interest rates, which contribute to a transition period during which households enjoy greater consumption and leisure.”