Family Cash Balances, Income, and Expenditures Trends Through 2021: A Distributional Perspective

37 Pages Posted: 4 Jun 2021

See all articles by Fiona Greig

Fiona Greig

JPMorgan Chase Institute

Erica Deadman

JPMorgan Chase Institute

Pascal Noel

University of Chicago Booth School of Business

Date Written: May 2021

Abstract

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

Greig, Fiona and Deadman, Erica and Noel, Pascal, Family Cash Balances, Income, and Expenditures Trends Through 2021: A Distributional Perspective (May 2021). Available at SSRN: https://ssrn.com/abstract=3855052 or http://dx.doi.org/10.2139/ssrn.3855052

Fiona Greig (Contact Author)

JPMorgan Chase Institute ( email )

Washington, DC
United States

Erica Deadman

JPMorgan Chase Institute ( email )

601 Pennsylvania Avenue NW
Washington, DC 20004
United States

Pascal Noel

University of Chicago Booth School of Business ( email )

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