Family cash balances, income, and expenditures trends through 2021

More than a year after the declaration of national emergency on March 13, 2020, the COVID-19 pandemic continues to constrain economic activity in unprecedented ways. Restrictions on group gatherings and non-essential outings make certain businesses untenable, leading to layoffs and closures. In other indus­tries, remote working has become the new normal, leading to dramatic shifts in daily needs and routines for employees. Schools have likewise struggled to reopen, with some forced back into remote instruction after increases in infections.

As families work to adapt to these frequently-changing conditions, economic health and stability are top of mind for policymakers. The most vulnerable among us have been impacted the most, with lower-income earners facing higher unemployment rates than their higher-earning counterparts (Ganong et al. 2020). The government responded with massive interventions to support households financially by funding stimulus checks, expanding and supplement­ing Unemployment Insurance (UI), and providing relief on debts.

In this report, we shed light on families’ financial positions during the pandemic, and how changes in behavior and policy have played a role. Using patterns in liquid balances as a lens into household finances, we aim to understand how the pandemic has affected financial vulnerability. Specifically, we focus on two main questions. First, how have liquid asset balances changed for families during the COVID-19 pandemic, and how does this differ across families—by demographic characteristics and industry of employment? And second, what are the drivers of these observed changes in balance? Specifically, how have consumer income, spending, and debt payments changed during the pandemic?