The Ongoing Impacts of COVID-19 on Americans’ Economic Security

The COVID-19 pandemic has had enormous effects on the U.S. economy. We use longitudinal survey data from a nationally representative Internet panel, the Understanding America Study, to examine the impacts of the pandemic, and policy responses, on Americans’ financial stability and behavior through the pandemic’s first year. Overall, we find that, on average, Americans’ short-term financial stability continued to improve through the first year of the pandemic. In particular, we observe year-over-year increases in subjective measures, such as financial satisfaction and lower financial stress, as well as persistently elevated objective measures, such as short-term savings behavior and balances. We find evidence consistent with the stimulus — particularly the Economic Impact Payments (EIPs) — being a key contributor to the improvements. Though we observe improvements on average on most measures of financial security, there are two notable exceptions — financial fragility (an inability to cover a $400 shock solely with cash or a cash equivalent [Federal Reserve Board 2019]) rose, and retirement balances declined, in 2021 relative to prepandemic levels. The increase in financial fragility was concentrated among individuals who did not receive the last EIP or had higher incomes. Since the stimulus program ended in 2021, signs of economic insecurity among more financially fragile households may become apparent in the near future. This underscores the importance of the stimulus in helping to blunt the pandemic’s adverse effects on households’ financial situations and is also concerning — since the stimulus and enhanced unemployment benefits have recently ended, signs of economic insecurity among more financially challenged households may become apparent in the near future.