Impact of COVID-19 on Consumer Market Response
The research discusses the significant effects of COVID-19 on consumer and market responses, highlighting issues such as employment, financial preparedness, credit applications, and the government's CARES Act. Insights from real-time data analysis and the implementation of relief measures are also covered.
Uploaded on Apr 04, 2025 | 0 Views
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.
E N D
Presentation Transcript
Consumer and Market Response to COVID- 19 Discussion 2021 CFPB research conference Scott Fulford The views expressed here are those of the author and not necessarily the views of the Bureau or of the United States.
Employment-to-Population: January 2020 to April 2020 Source: FRED and BLS 2
Prior to the pandemic, many households were not prepared to weather an extended period of income drop Making Ends Meet Survey in June 2019: 49 percent of households would not be able to cover expenses for more than two months if they lost their main source of income by borrowing, using savings, selling assets or seeking help from friends or family. 3
Credit applications dropped precipitously in March Source: Nagyp l, Gibbs, Fulford (April 2020) The Early Effects of the COVID-19 Pandemic on Credit Applications 4
Rapid research to understand what was happening Research groups everywhere thought hard about what we could contribute Everyone started rethinking data: How fast does it come in? Does it tell us about consumer problems now? Or in the past? Is it any good? Research with almost real-time micro data was very influential Chetty, Friedman, Hendren, Stepner, and the Opportunity Insights Team Census Pulse Survey JP Morgan Chase Institute 5
$2.2 trillion CARES Act signed March 27 Economic Impact Payments ( stimulus ) of $1,200 per person plus $500 per child Extended unemployment benefits of $600 a week Paycheck protection program Forbearance for all federally backed mortgages Payment suspension for all federal student loans Lots of other stuff: Borrowing from retirement accounts, money for state and local governments, educational institutions, transit, disaster relief 6
Economic Impact Payments mostly mid April 7 Source: Baker, Farrokhnia, Meyer, Pagel, Yannelis (January 2021)
Economic Impact Payments mostly mid April 8 Source: Baker, Farrokhnia, Meyer, Pagel, Yannelis (January 2021)
Employment-to-Population: January 2020 to July 2020 Source: FRED and BLS 9
Unemployment benefits came and went and came again The $600 CARES Act extended unemployment benefits seem to have made a big difference, but ended on July 31, 2020 Using JPMCI data, Farrell, Ganong, Greig, Liebeskind, Noel, and Vavra (July 2020) showed that spending fell when become unemployed, then rose when benefits begin In subsequent analysis, Farrell, Ganong, Greig, Liebeskind, Noel, Sullivan, and Vavra (October 2020) showed that savings rose while receiving unemployment benefits, but had exhausted two thirds of accumulated savings in August after CARES Act benefits ended December relief package and March American Rescue Plan restarted $300 extended unemployment benefits to September 10
Remember those households with two months or less of liquidity? Their credit card debt fell too! 11 Source: Fulford and Rush (December 2020) Credit card debt fell even for consumers who were having financial difficulties before the pandemic
Consumer debt and delinquencies went down Source: Sandler and Ricks (August 2020) The Early Effects of the COVID-19 Pandemic on Consumer Credit
Things get weird in housing Housing sales plunged in April and May Then buyers and sellers figured out how to navigate transactions during the pandemic Rest of 2020 and 2021 existing home sales and prices at their highest level since 2006 Consumers rethinking where and what kind of housing they want But existing inventory low, bidding wars Affordable housing will continue to be an issue CFPB Source: Friedman (Wall Street Journal, March 15, 2021) and National Association of Realtors
Things get weird in housing But not everyone figured out how to operate efficiently during the pandemic as Fuster, Hizmo, Lambie-Hanson, Vickery, and Willen (April 2021) point out: Intermediation markups stayed high because pandemic created operational and labor market frictions Low rates and Fed quantitative easing not going through to consumers Fintech lenders gain market share; already figured out how to remove humans as much as possible from the process Credit supply contraction in parts of the market with greatest risk CFPB
What did mortgage forbearance do? Farrell, Greig, Zhao (December 2020) using JPMCI account level data Forbearance didn t reach everybody! Some missed payments, but not in forbearance What about the renters? Largely left out of policy until December, and disbursement of rental assistance slow. Lower income, lower assets, more often minority. Helped some homeowners not go delinquent Helped others by providing extra precautionary buffer Homeowners who missed payments had drops in income
Employment-to-Population: January 2020 to March 2021 Source: FRED and BLS 16
