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

Natalie Bachas, Peter Ganong, Pascal J. Noel, Joseph Vavra (), Arlene Wong (), Diana Farrell and Fiona E. Greig

No 27617, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: E21 E6 E62 H31 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-ias and nep-mac
Note: EFG ME PE
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