Category: COVID-19

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Using data from the nation’s largest payroll processor from February through May, this paper finds that employment losses were disproportionately concentrated among low-income workers while wage cuts were disproportionately concentrated among workers in the top two deciles of the wage distribution. The percent of workers receiving wage cuts was roughly twice that
reported during the Great Recession.

Tomaz Cajner et al., National Bureau of Economic Research Working Paper No. 27159

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This paper provides the first analysis of impacts of the pandemic on the number of active small businesses in the United States using nationally representative data from May 2020. The number of active business owners rebounded 7% since the low in April but remained 15% down from February. Drops in business activity from pre-pandemic levels are disproportionately concentrated among African-American (26%), Latino (19%), Asian (21%), and immigrant (25%) business owners.

Robert Fairlie, National Bureau of Economic Research Working Paper No. 27462

Read Report

This report tracks consumer spending patterns in the weeks after receiving federal stimulus payments using debit card data for more than 16,000 recipients. Consumers who live paycheck-to-paycheck spent 68% of the funds in the first two weeks, while higher-income consumers and those who generally save a significant portion of their income spent an average of 23% in the same time period.

Ezra Karger & Aastha Rajan, Federal Reserve Bank of Chicago Working Paper No. 2020-15

Read Blog

The blog analyzes survey results from the U.S. Census Bureau that provide the first real-time, national data on housing payments disaggregated by race and ethnicity, income, age, and other household characteristics. Among both renters and homeowners, African-Americans, Latinos, and low-income households were more likely to miss or defer housing payments in May than other groups.

Solomon Greene & Alanna McCargo, Urban Institute

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The blog links both prior and forthcoming research on when consumers are likely to stop paying their mortgages due to a “double trigger” from income shocks due to job losses or other events that then cause drops in housing prices. The authors conclude that income support to households and small businesses in the wake of the COVID-19 pandemic has limited disruption to date in the housing market in addition to supporting individual families.

Chris Cunningham & Kris Gerardi, Federal Reserve Bank of Atlanta

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This article examines changes in mortgage lending, including tightening of lending standards and narrowing of product offerings, since the passage of the CARES Act. The authors compare these changes to lenders’ reaction to the 2008 financial crisis and assess how they affect broader economic recovery.

Andrew Ackerman and Nick Timiraos, Wall Street Journal

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This article evaluates how the need to distribute emergency funds widely and quickly may spur the creation of a new, publicly run payment system. The author highlights recent legislative initiatives like one in New York that would provide residents with a digital wallet and discusses the implications of central bank account provisioning by the Federal Reserve.

Mike Orcutt, MIT Technology Review

Read Brief

This research brief surveys how banks are prioritizing pandemic-related needs and being responsive to evolving community conditions in light of their Community Reinvestment Act obligations. Based on a survey of community development officers, institutions are starting to shift beyond meeting short-term needs and leveraging existing projects to develop ideas for new and innovative programs on small-dollar lending, small business technical assistance, and other topics.

Bina Shrimali, Federal Reserve Bank of San Francisco