Family Cash Balances, Income, and Expenditures Trends Through 2021: A Distributional Perspective
37 Pages Posted: 4 Jun 2021
Date Written: May 2021
The COVID-19 pandemic resulted in unprecedented economic changes that impacted families’ financial positions. In this report, the JPMorgan Chase Institute uses administrative banking data to assess checking account balances in conjunction with household income and spending. We analyze activity from 1.7 million families who were active checking account users between December 2018 and January 2021 to understand changes in household finances during the COVID-19 pandemic. We find that cash balances temporarily increased by roughly 70 percent after the arrival of stimulus payments in April 2020 and January 2021, with lower-income and younger account holders experiencing the largest balance increases on a percent basis. Balances fell continuously after the stimulus payments, with faster spend-down for families that are lower-income, younger, or working in essential industries. Furthermore, the mechanisms for initial pandemic balance increases differed by family income. Despite greater job losses, low-income families experienced balance increases driven by increases in income, due in part to government supports. High-income families, in contrast, experienced balance increases despite decreases in account inflows because of large concurrent decreases in account outflows. Altogether, our results offer new insights into families’ financial lives and cash balances during the COVID-19 pandemic, and contribute to the ongoing understanding of the economic impacts of the pandemic and associated government supports.
Keywords: Household finance, stimulus payments, economic impact payments, COVID-19 household finance, cash balances, liquid assets, household income, household spending, consumer debt payments
JEL Classification: D14, E21, H12, H31
Suggested Citation: Suggested Citation