After Across-the-Board Decline, Consumer Spending Has Rebounded Fastest for Low-Income Households

Consumer purchases in late March 2020 were more than 35 percent lower than in the same period the previous year, according to detailed data on household credit and debit card charges and banking transactions. While the drop occurred in all income groups, and all groups subsequently recovered, by late May, spending by those in the lowest income quartile was only 10 percent lower than a year earlier, while spending by highest quartile households remained down by over 20 percent. Faculty Research Fellows Peter Ganong, Joseph Vavra, and Arlene Wong, and their collaborators Natalie Bachas, Diana Farrell, Fiona Greig, and Pascal Noel, report these findings, and also document a sharp increase in liquid balances for many households, in a recent working paper (27617).  Wong summarizes their findings in the short video below.


Five NBER working papers distributed this week examine the economic impact of the COVID-19 pandemic and various policy responses to it. The studies analyze how the $600 unemployment insurance supplement in the CARES Act affected consumer spending (27576), present cross-country evidence on the effect of programs designed to keep businesses afloat through the pandemic (27637), estimate the impact on restaurant traffic of lifting lockdown provisions (27650), explore the role of fintech firms as substitutes for traditional banks in serving firms that benefit from the Paycheck Protection Program (27659), and describe gender-related differences in the pandemic’s labor market effects (27660).

More than 210 NBER working papers have presented pandemic-related research. These papers are open access and have been collected for easy reference. Like all NBER papers, they are circulated for discussion and comment, and have not been peer-reviewed. View them in reverse chronological order or by topic area.