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RESEARCH Household Finances Pulse: Cash Balances during COVID-19

Last updated with March 2021 data

The COVID-19 pandemic resulted in an unprecedented recession that impacted families’ financial positions. The JPMorgan Chase Institute leverages de-identified adminis­trative banking data to assess checking account balances in conjunction with household income and spending. Based on recent JPMC Institute research, this Household Finances Pulse analyzes changes in cash balances during the COVID-19 pandemic across the distribution of cash balances and by income quartile.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and delivered the first round of stimulus, or economic impact payments (EIP) of up to $1,200 per adult and $500 per qualifying child. As part of the December 2020 Consolidated Appropriations Act, a second round of EIP was distributed in January 2021, providing up to $600 for individuals or $1,200 for married couples and up to $600 for each qualifying child. The third round of EIP was delivered through the American Rescue Plan, signed into law on March 11, 2021, and provided $1,400 per eligible individual, adult or child.

Figures 1 and 2 show that cash balances increased with the arrival of each round of stimulus, with larger percent increases among families with low liquid assets and low incomes. By March 27, 2021, liquid assets were significantly boosted again by the third round of stimulus. Most but not all families received their third round of stimulus by this date.1

As with the first and second rounds of stimulus, percent increases in liquid balances were largest for the lower end of the liquid asset distribution and for low-income families after the arrival of the third round of stimulus. The 25th percentile of liquid balances was 93 percent elevated at its peak in March 2021 relative to the same week in 2020. Families in the lowest income quartile (below $30,296 in take-home labor income) experienced a 105 percent increase in their cash balances at their peak in March 2021. On the other hand, after each round of stimulus we observe cash buffers depleting faster at the low end of the liquid asset distribution and for families with low incomes, than for high-income families or the high end of the liquid asset distribution. This underscores the fact that stimulus and the social safety net in general are playing a key role in boosting cash buffers, especially lifting the low end of the cash buffer distribution and boosting cash buffers for families with low incomes, showing the importance of targeted support.

 

Figure 1: Cash balances increased with the arrival of each round of stimulus, with larger percent increases among low-liquid asset families

 

Figure 2: Low-income families saw the greatest year-over-year percent balance gains, but depleted those gains faster than high-income families

1. The U.S. Government Daily Treasury Statements indicate that the vast majority of round three stimulus payments delivered as of May 5, 2021 (75 percent) went out on March 17 ($242B). By May 5, 2021, $323 billion cumulatively had been sent out since March.