Despite the severe weather conditions in the past few weeks, which adversely impacted some sections of the economy, the overall economy is showing a slow and gradual growth. The main adverse impact of the severe weather was on the housing market, where housing starts declined 16 percent in January to 880,000 units. However, the $10 billion per month reduction in its asset purchase program indicates that the Fed is projecting continued modest growth in the economy. Currently, it appears that the Fed will conclude its tapering initiative by the end of this year.
The link between the state of the economy and the level of consumer financial anxiety is empirically demonstrated in Money Anxiety - a new behavioral economics book that shows how consumers modify their savings and spending habits based on their level of money anxiety. Moreover, the strong link between consumer financial behavior and their money anxiety makes it possible to project how consumers will behave with their money at various levels of economic conditions.