Initial Impacts of the Pandemic on Consumer Behavior: Evidence from Linked Income, Spending, and Savings Data

Natalie Cox, Peter Ganong, Pascal Noel, Joseph Vavra, Arlene Wong, Diana Farrell, Fiona Greig and Erica Deadman
Additional contact information
Natalie Cox: Princeton University
Peter Ganong: University of Chicago
Pascal Noel: University of Chicago
Diana Farrell: JPMorgan Chase Institute
Fiona Greig: JPMorgan Chase Institute
Erica Deadman: JPMorgan Chase Institute

Brookings Papers on Economic Activity, 2020, vol. 51, issue 2 (Summer), 35-82

Abstract: We use US 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 prepandemic 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: COVID-19; US economy; household; labor market (search for similar items in EconPapers)
Date: 2020
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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)
Working Paper: Initial impacts of the pandemic on consumer behavior: Evidence from linked income, spending, and savings data (2020)
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