The Early Impacts of the Coronavirus Pandemic on Americans’ Economic Security

Abstract

The COVID-19 pandemic has had enormous effects on the U.S. economy and may have had serious negative repercussions for many Americans’ financial stability. We use longitudinal survey data from a nationally representative internet panel, the Understanding America Study, to examine the early impacts of the pandemic and policy responses to it, on Americans’ financial stability, financial well-being, and financial behavior (as of May 2020). We find that rather than experiencing large declines, Americans’ financial stability improved, on average, soon after the pandemic’s onset of the. In particular, we observe increases both in subjective measures (such as financial satisfaction) and in more objective measures (such as financial fragility and savings behavior and balances). Moreover, individuals who were more economically vulnerable prepandemic — such as those with lower incomes and financial literacy, and individuals struggling with debt burdens or having difficulty making ends meet — experienced differentially large improvements in their financial situation post-pandemic. We find evidence that much of the improvement, both overall and differential, was driven by the stimulus, which was more impactful for those who were more economically vulnerable. Rather than simply help prevent widening inequality in financial stability, the governmental policy response may have helped close the gap, at least early in the pandemic. While we find that Americans’ current financial situation improved post-pandemic, we observe little difference in retirement savings behavior or security, suggesting these early effects may not translate into improved retirement outcomes in the future.