Initial impacts of the pandemic on consumer behavior: Evidence from linked income, spending, and savings data

Natalie Cox, Peter Ganong, Pascal Noel, Joseph Vavra and Arlene Wong
Additional contact information
Natalie Cox: Princeton Unviersity
Peter Ganong: University of Chicago
Pascal Noel: University of Chicago

Working Papers from Princeton University. Economics Department.

Abstract: We use U.S. household-level bank account data to investigate the heterogeneous effects of the pandemic on spending and savings. Households across the income distribution all cut spending from March to early April. Since mid April, spending has rebounded most rapidly for low-income households. We find large increases in liquid asset balances for households throughout the income distribution. However, lower-income households contribute disproportionately to the aggregate increase in balances, relative to their pre-pandemic shares. Taken together, our results suggest that spending declines in the initial months of the recession were primarily caused by direct effects of the pandemic, rather than resulting from labor market disruptions. The sizable growth in liquid assets we observe for low-income households suggests that stimulus and insurance programs during this period likely played an important role in limiting the effects of labor market disruptions on spending.

Keywords: U.S.; Northern America; Consumer; Distribution; Households; Income; Income Distribution; Recession; Saving; Pandemic (search for similar items in EconPapers)
JEL-codes: D12 D31 E21 E32 E62 G51 I12 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-ban, nep-hea, nep-ias and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

Downloads: (external link)
https://bfi.uchicago.edu/wp-content/uploads/BFI_WP_202082.pdf

Related works:
Journal Article: Initial Impacts of the Pandemic on Consumer Behavior: Evidence from Linked Income, Spending, and Savings Data (2020)
Working Paper: Initial Impacts of the Pandemic on Consumer Behavior: Evidence from Linked Income, Spending, and Savings Data (2020)
Working Paper: Initial Impacts of the Pandemic on Consumer Behavior: Evidence from Linked Income, Spending, and Savings Data (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pri:econom:2020-39

Access Statistics for this paper

More papers in Working Papers from Princeton University. Economics Department. Contact information at EDIRC.
Bibliographic data for series maintained by Bobray Bordelon ().