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Tag Archives: Household Finance

Monetizing Privacy with Central Bank Digital Currencies

Rod Garratt and Michael Lee In prior research, we documented evidence suggesting that digital payment adoptions have accelerated as a result of the COVID-19 pandemic. While digitalization of payment activity improves data utilization by firms, it can also infringe upon consumers’ right to privacy. Drawing from a recent paper, this blog post explains how payment data acquired by firms impacts market structure and consumer welfare. Then, we discuss the implications of introducing a...

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Following Borrowers through Forbearance

Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw Today, the New York Fed’s Center for Microeconomic Data reported that total household debt balances increased slightly in the third quarter of 2020, according to the latest Quarterly Report on Household Debt and Credit. This increase marked a reversal from the modest decline in the second quarter of 2020, a downturn driven by a sharp contraction in credit card balances. In the third quarter,...

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How Do Consumers Believe the Pandemic Will Affect the Economy and Their Households?

Olivier Armantier, Leo Goldman, Gizem Koşar, Jessica Lu, Rachel Pomerantz, and Wilbert van der Klaauw In this post we analyze consumer beliefs about the duration of the economic impact of the pandemic and present new evidence on their expected spending, income, debt delinquency, and employment outcomes, conditional on different scenarios for the future path of the pandemic. We find that between June and August respondents to the New York Fed Survey of Consumer Expectations (SCE)...

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Consumers Expect Modest Increase in Spending Growth and Continued Government Support

Gizem Koşar, Rachel Pomerantz, and Wilbert van der Klaauw The New York Fed’s Center for Microeconomic Data released results today from its August 2020 SCE Household Spending Survey and SCE Public Policy Survey. The former provides information on consumers' experiences and expectations regarding household spending, while the latter provides information on consumers' expectations regarding future changes for a wide range of fiscal and social policies and the potential impact of these...

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COVID-19 and the Search for Digital Alternatives to Cash

Rod Garratt, Michael Lee, and Aaron Plesset Today, the majority of retail payments in the United States are digital. Practically all digital payments are tracked, collected, and aggregated by financial institutions, payment providers, and vendors. This trend has accelerated during the COVID-19 pandemic as payments that require physical contact, such as cash, have been discouraged. As cash gradually becomes obsolete, consumers are left with fewer alternatives for making private...

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How Did State Reopenings Affect Small Businesses?

Rajashri Chakrabarti, Sebastian Heise, Davide Melcangi, Maxim Pinkovskiy, and Giorgio Topa In our previous post, we looked at the effects that the reopening of state economies across the United States has had on consumer spending. We found a significant effect of reopening, especially regarding spending in restaurants and bars as well as in the healthcare sector. In this companion post, we focus specifically on small businesses, using two different sources of high-frequency data,...

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Debt Relief and the CARES Act: Which Borrowers Face the Most Financial Strain?

Rajashri Chakrabarti, Andrew Haughwout, Donghoon Lee, William Nober, Joelle Scally, and Wilbert van der Klaauw In yesterday's post, we studied the expected debt relief from the CARES Act on mortgagors and student debt borrowers. We now turn our attention to the 63 percent of American borrowers who do not have a mortgage or student loan. These borrowers will not directly benefit from the loan forbearance provisions of the CARES Act, although they may be able to receive...

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Debt Relief and the CARES Act: Which Borrowers Benefit the Most?

Rajashri Chakrabarti, Andrew Haughwout, Donghoon Lee, William Nober, Joelle Scally, and Wilbert van der Klaauw COVID-19 and associated social distancing measures have had major labor market ramifications, with massive job losses and furloughs. Millions of people have filed jobless claims since mid-March—6.9 million in the week of March 28 alone. These developments will surely lead to financial hardship for millions of Americans, especially those who hold outstanding debts...

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Are Financially Distressed Areas More Affected by COVID-19?

Rajashri Chakrabarti, William Nober, and Maxim Pinkovskiy Building upon our earlier Liberty Street Economics post, we continue to analyze the heterogeneity of COVID-19 incidence. We previously found that majority-minority areas, low-income areas, and areas with higher population density were more affected by COVID-19. The objective of this post is to understand any differences in COVID-19 incidence by areas of financial vulnerability. Are areas that are more financially distressed...

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The Disproportionate Effects of COVID-19 on Households with Children

Olivier Armantier, Gizem Koşar, Rachel Pomerantz, and Wilbert van der Klaauw A growing body of evidence points to large negative economic and health impacts of the COVID-19 pandemic on low-income, Black, and Hispanic Americans (see this LSE post and reports by Pew Research and Harvard). Beyond the consequences of school cancellations and lost social interactions, there exists considerable concern about the long-lasting effects of economic hardship on children. In...

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