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

37 Pages Posted: 30 Jun 2020 Last revised: 23 Jul 2020

See all articles by Natalie Cox

Natalie Cox

Princeton University - Department of Economics

Peter Ganong

University of Chicago; National Bureau of Economic Research (NBER)

Pascal Noel

University of Chicago Booth School of Business

Joseph Vavra

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Arlene Wong

Princeton University

Diana Farrell

JP Morgan Chase & Co. - JP Morgan Chase Institute

Fiona Greig

JPMorgan Chase Institute

Date Written: July 21, 2020

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.

Suggested Citation

Cox, Natalie and Ganong, Peter and Noel, Pascal and Vavra, Joseph and Wong, Arlene and Farrell, Diana and Greig, Fiona, Initial Impacts of the Pandemic on Consumer Behavior: Evidence from Linked Income, Spending, and Savings Data (July 21, 2020). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-82, Available at SSRN: https://ssrn.com/abstract=3633008 or http://dx.doi.org/10.2139/ssrn.3633008

Natalie Cox

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

Peter Ganong (Contact Author)

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Pascal Noel

University of Chicago Booth School of Business ( email )

Joseph Vavra

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Arlene Wong

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Diana Farrell

JP Morgan Chase & Co. - JP Morgan Chase Institute ( email )

New York, NY
United States

Fiona Greig

JPMorgan Chase Institute ( email )

Washington, DC
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1,771
Abstract Views
4,307
rank
10,850
PlumX Metrics