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

By Natalie Cox, P. Ganong, P. Noel, Joseph Vavra, Arlene Wong, Diana Farrell, Fiona Greig, Erica Deadman. Social Science Research Network, 2020

250 citations recorded by the source corpus.

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.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/33b3a5703146e05a4796fc005f081ced330f2c37

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Citations in the corpus

US unemployment insurance replacement rates during the pandemic (2020, unknown): “This is in turn important for understanding overall spending patterns during this recession (Bachas et al. 2020). It also implies that research designs which rely on employment shift-shares as instruments for overall income must be interpreted with care during this recession. After documenting these”
Do Stay-at-Home Orders Cause People to Stay at Home? Effects of Stay-at-Home Orders on Consumer Behavior (2020, unknown): “[5] Natalie Bachas, Peter Ganong, Pascal J.”
The impact of the COVID-19 pandemic on the demand for density: Evidence from the U.S. housing market (2020, unknown): “Consumption amenities such as restaurants saw sudden drop in visits (Cox et al., 2020).”
THE ECONOMIC IMPACTS OF COVID-19: EVIDENCE FROM A NEW PUBLIC DATABASE BUILT USING PRIVATE SECTOR DATA (2023, methodology): “It may be surprising that we do not see a decline in aggregate spending in Figure 2a when supplemental unemployment benefits expired at the end of July 2020. Farrell et al. (2020b) estimate that the expiration of supplemental unemployment benefits led to a $96 reduction in weekly spending among unem”
The Effects of COVID-19 on U.S. Small Businesses: Evidence from Owners, Managers, and Employees (2020, unknown): “…efforts to use surveys to better understand the performance of U.S. small businesses during this period.1 For example, Bartik et al. (2020), Fairlie (2020), and Humphries et al. (2020a) document business closures and mass layoffs early in the pandemic (see also Bartlett 2022, Campello et…”
Income and Poverty in the COVID-19 Pandemic (2020, background): “Cox et al. (2020) finds that income flows into household bank accounts and saving increased early in the pandemic.”
How Did COVID-19 and Stabilization Policies Affect Spending and Employment? A New Real-Time Economic Tracker Based on Private Sector Data (2020, methodology): “We verify the quality of this imputation procedure by showing that our estimates of the gap in spending reductions by income group are aligned with those of Cox et al. (2020), who observe income directly for JPMorgan Chase clients, as of mid-April 2020, the last date available in their series.”
Consumer responses to the Covid‐19 crisis: evidence from bank account transaction data (2020, unknown): “The cumulative mortality through the first wave was 107 deaths per million inhabitants in Denmark (as of 11 August 2020), which is comparable to Germany (110); lower than in Sweden, France, U.K. and the U.S. (all more than 400), but higher than in Norway and Finland (both 60 or less).”