Since March 2020, 新型冠状病毒肺炎 drove uncertainty in the U.S. economy first by being an unprecedented global health event and then by generating an equally unprecedented economic policy response. This uncertainty was further exacerbated by record high inflation and correspondingly high interest rates beyond the onset of the pandemic. Public data show the significant impact of these events on the overall spending and asset levels, but few if any recent data sources shed light on how families managed their cash balances throughout these changes.
In the 家庭脉冲: Balances through March 2023 and Household Cash Buffer Management from the Great Recession through 新型冠状病毒肺炎, we shed light on the evolution of household liquidity by analyzing inflation-adjusted real cash balances and cash buffers (liquid balances scaled to expenses). Across these reports, we highlight three key takeaways about household liquidity since the Great Recession with a particular focus on developments during the COVID era:
- Over a relatively wide array of economic circumstances, households manage their liquidity to stable levels. From the Great Recession until just prior to the 新型冠状病毒肺炎 surge in liquidity, the typical family held a remarkably stable number of days of spending in their checking accounts. While aggregate cash buffers were quite stable, month-to-month changes in individual incomes can be highly volatile, with lower-income families being more likely to live paycheck-to-paycheck. 也就是说, families tend to manage their balances towards a level of expense coverage and save or spend their way back to prior averages following shocks.
- Cash balances and buffers grew significantly during the COVID-era fiscal policy interventions, especially for low income, 黑色的, and Hispanic families in relative terms. 在水平, 低收入, 黑色的, and Hispanic families had substantially smaller cash balances and cash buffers than high-income, 白色, and 亚洲 families—before COVID, as overall balances reached their peak, and as balances declined. From lower levels, 低收入, 黑色的, and Hispanic families saw the largest percent rise in cash buffers and balances at the pandemic peak relative to 2019 levels.
- Cash balances and buffers have retreated significantly from their COVID-era peaks as families adjusted their spending in the context of high inflation. As of the end of March 2023, real median cash balances were 10 to 15 percent elevated compared to the same period in 2019—the lowest elevation observed since April 2020. Following the pattern of individual-level dynamics seen prior to the pandemic, families have gravitated toward a relatively stable “normal” cash buffer level over time. 值得注意的是, 黑色的 families experienced a more rapid reversal of cash buffer gains, leaving a larger racial gap as of the end of 2022 compared to levels seen in the 2010s.