Rising asset markets helped the rich and government payments let the poor break even
We just finished a study that looks at how the pandemic affected the finances of vulnerable households as well as those with more resources, using data from the Panel Study of Income Dynamics . The PSID is a panel survey, which allows us to follow the same households over time, that includes in-depth information on household finances.
These numbers represent the net of a lot of action over this two-year period—federal support through Economic Impact Payments , rising equity/house prices, changes in consumption, and changes in earnings net of Unemployment Insurance payments.
The easiest component to calculate is the EIPs, which simply vary with household income and number of children. Calculations for the PSID sample show that the lowest-wealth households received an average of $5,400 from these stimulus payments; medium-wealth households $6,000; and the highest-wealth households $4,400.
The third factor is changes in consumption, which might help explain why the lowest-wealth households did not see improvements in their wealth.Indeed, data from the Consumer Expenditure Survey confirm this hypothesis . The lowest-wealth households initially cut their consumption in 2020 but then increased it notably in 2021 for a net increase over the two-year period.
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