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This year, as the world turned its attention to address COVID-19, we leveraged our granular, high-frequency data to update decision makers on the economic impact of the pandemic and associated government relief efforts on households, small businesses, and communities, while continuing longer-term research into racial disparities in financial outcomes, the housing market, and student loan burden. Importantly, we continued to refine and apply a demographic lens to much of our work in recognition that an equitable economic recovery must to go beyond a return to pre-pandemic baselines. Below are data points from our research tracking the economic impact of COVID-19 and pre-pandemic disparities.
$1 vs. 71¢ vs. 74¢
$1 vs. 71¢ vs. 74¢
For every $1 the median White family earned, the median Black family earned just 71¢, and the median Latinx family earned 74¢. Gaps in liquid assets were 2x as large.
59%
59%
Black-owned small business earned 59% less and Latinx-owned businesses earned 21% less in first-year revenues than White-owned businesses.
35%
35%
At the onset of the pandemic, spending fell by more than 35%, an enormous drop 8x that typically observed among unemployment insurance recipients in the first month after job loss.
2x
2x
The unemployed doubled their liquid savings between March and July due $600 benefit supplement provided by the CARES Act, but spent 2/3 of the accumulated savings in August alone.
1/3
1/3
CARES Act mortgage forbearance policies helped homeowners experiencing financial hardship in a material way. 1/3 of homeowners in forbearance made all payments to date, suggesting that many homeowners signed up as a precautionary measure, while 2% of homeowners not in forbearance have missed payments.
80%
80%
Over 80% of individuals who received unemployment insurance were in forbearance but continued making mortgage payments, underscoring the pivotal role unemployment benefits played in helping homeowners stay current on their mortgages.
10%
10%
While most student loan borrowers are not unreasonably burdened by payments, many borrowers, especially lower-income and younger borrowers, face payment burdens well over 10%. Compared to White and Latinx student loan borrowers, Black borrowers are less likely to be making progress on their loans.
7%
7%
Small business expenses were 7% lower in September than they were a year prior, suggesting that businesses may be deferring payments to maintain cash liquidity. A sector with depleted assets or growing accounts payable may be less well positioned for a recovery.
Declines in balances
Declines in balances
Minority owned-businesses, as well as restaurants and personal services firms were among the hardest hit by the pandemic, experiencing the largest decline in cash balances and revenues.
20%
20%
In July, online spending was up 20% and brick-and-mortar spending was down 21% year-over-year, as consumers shifted to online spending.
0¢ - 1.6¢
0¢ - 1.6¢
The marginal propensity to consume out of a $1 increase in housing wealth after the Great Recession is between 0¢ - 1.6¢, implying that house price appreciation through the housing wealth effect channel contributed little to consumption and GDP growth during the housing market recovery between 2012 - 2018.
Impact on market prices
Impact on market prices
Institutional investor trading activity appears to have an impact on market prices and stability.
$2,150
$2,150
In neighborhoods where residents do not have to travel as far to access retail amenities, small businesses have higher revenues and profit margins. Businesses located in neighborhoods with lower retail distances have 27% higher revenues and $2,150 more in annual profits than businesses located neighborhoods with higher retail distances.