ABA Banking Journal
No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
SUBSCRIBE
ABA Banking Journal
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
No Result
View All Result
No Result
View All Result
Home Economy

Households Will Be Key to Economic Recovery from COVID-19

May 11, 2020
Reading Time: 4 mins read
Coronavirus Response: Common Practices for Community Banks

By Tyler Mondres

Consumption has long been the engine of economic growth. As such, consumer health will be key to limiting the depth and length of the COVID-19 recession. Consumers were generally well positioned prior to the health crisis, with historically low debt relative to disposable income. Social distancing, however, has affected US households unevenly. Those employed in industries that require people to gather in large groups or interact closely in person have been hardest hit, while those in industries designated “critical” and those with the ability to telework have been less affected.

Widespread layoffs, furloughs hit the country

Total nonfarm payroll employment fell by 21.2 million in March and April—wiping out all job gains recorded since the Great Recession—and more than 33 million people have filed for unemployment insurance in the last seven weeks. Widespread layoffs and furloughs have hit the transportation, entertainment, retail, and leisure and hospitality sectors the hardest. In fact, more than half of respondents to a recent LendEDU survey said their employment was affected by COVID-19. Those most affected earn less, on average, than others. While they make up a little more than a fifth of the total labor force, they account for only 12.2 percent of total wage earnings.

Households begin to tap savings, emergency funds

These workers have begun to dip into savings and emergency funds to cover expenses. Nearly two-thirds (63 percent) are worried about their bank accounts drying up—88 percent among those who recently lost jobs—and 39 percent of those with credit cards expect to take on more debt than desired to stay afloat. The Federal Reserve’s Survey of Consumer Expectations shows substantial deterioration in households’ financial and economic expectations. For March, there was a 17.3 percentage point rise in the number of households who expect to be worse off financially next year.

The Economic Impact Payments included in the CARES Act helped many workers. One survey found that 57 percent of respondents plan to use the money to pay off debt, pay rent or mortgage, or buy necessities like food or supplies. A survey conducted in late March by SimplyWise, though, found that 63 percent of households will need another EIP within three months and 15 percent will need one in just two weeks.

Divergent outcomes by industry, firm size

Those with the ability to telework—accountants, analysts, managers, etc.—have been less affected by COVID-19 shutdowns. Among LendEDU respondents, three out of 10 said they plan to put their CARES Act payment into savings accounts or emergency funds.

There is risk of further divergence in wages by industry and business size. Smaller firms have been most affected, while large firms, with professional and flexible staff and work arrangements, have been better able to hold off on layoffs and wage cuts. This could lead to a gap in worker outcomes. Professional jobs at large firms could experience a faster bounce-back, while small businesses require several years to recover to pre-coronavirus levels. Thousands of firms are likely to fail in this downturn, keeping unemployment high for an extended period.

The Small Business Administration’s Paycheck Protection Program is reducing financial stress for many small businesses by providing for SBA-guaranteed funding to retain workers. This will likely reduce layoffs and increase the survival rate of small businesses. Nonetheless, staffing is likely to remain cautious and only enough to meet PPP requirements. The PPP exhausted its first round of funding and it remains to be seen if the second round is enough to help all the small businesses in need .

The unknown shape of the recovery

Economists struggle with the question of what recovery will look like when the economy reopens. Whatever shape recovery takes, household health will be key. Consumption, the engine of economic growth, has collapsed amid social distancing measures. Retail sales plunged 8.7 percent from February to March—the steepest decline on record—and were down 6.2 percent from March 2019.

If the pandemic can be controlled within the next few months and the nation can reopen, trillions of stimulus dollars may support a rebound. When a large number of firms re-open, we can expect an initial surge in activity as consumers may go on spending binges to satisfy pent up demand. After the initial surge, a synchronous recovery will be needed to build momentum for growth.

Tags: ABA DataBankCoronavirusEconomic impact paymentsEmployment situationSBA Paycheck Protection ProgramSurvey of Consumer ExpectationsSurveys
ShareTweetPin

Author

Tyler Mondres

Tyler Mondres

Tyler Mondres is senior director of economic research at ABA and a frequent contributor on economic and fintech topics to the ABA Banking Journal.

Related Posts

Fed chair nomination hearing scheduled for next week

Senate confirms Warsh as Fed chairman

Economy
May 13, 2026

The Senate voted 54-45 to confirm Kevin Warsh as the next chairman of the Federal Reserve. The Senate confirmed his appointment to the Fed board on Tuesday.

Producer price index increased 0.5% in April

Producer prices rose 1.4% in April

Economy
May 13, 2026

The Producer Price Index for final demand increased 1.4% in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported. On an unadjusted basis, the index for final demand rose 6% for the 12 months ending in April.

Fed survey: Unbanked status continues to vary among income, ethnic groups

Fed survey: Unbanked rate little changed in 2025

Compliance and Risk
May 13, 2026

Roughly 6% of U.S. adults were unbanked last year, a figure that has held steady since 2021. The Fed survey also polled respondents on experience with scams, credit availability and cryptocurrency use.

Poll: Small business owners optimistic about the future

NFIB: Small business optimism remained below average in April

Economy
May 12, 2026

The NFIB Small Business Optimism Index rose 0.1 points in April to 95.9, below its 52-year average of 98 for the second consecutive month, according to NFIB. The Uncertainty Index fell four points from March to 88, remaining...

New York Fed: Household debt reaches nearly $18T

New York Fed: Household debt holds at $18.8T in Q1

Economy
May 12, 2026

Household debt increased by $18 billion, or just 0.1%, to hold steady at $18.8 trillion in the first quarter of 2026, the Federal Reserve Bank of New York reported in its most recent Quarterly Report on Household Debt...

Consumer prices steady in December

ABA DataBank: Energy prices continue to drive a hot CPI

Economy
May 12, 2026

Persistent upward inflation reinforces expectations that interest rates will remain higher for longer, supporting loan yields but margins will remain pressured as funding costs remain competitive, ABA economists said.

NEWSBYTES

ABA supports issuance of ‘know your upstream provider’ proposal

May 13, 2026

House committee advances ABA-backed bills on bank supervision, fighting scams

May 13, 2026

Senate confirms Warsh as Fed chairman

May 13, 2026

SPONSORED CONTENT

Credit Memos at the Convergence Point

Credit Memos at the Convergence Point

May 1, 2026
Digital Account Opening: Think Outside the Box for Maximum Business Impact

Digital Account Opening: Think Outside the Box for Maximum Business Impact

April 29, 2026
Why Your Systems Keep Slowing Down — and What to Do About It

Why Your Systems Keep Slowing Down — and What to Do About It

April 21, 2026
Planning Your 2026 Budget? Allocate Resources to Support Growth and Retention Goals

How leading banks are enhancing customer engagement through financial data insights

April 10, 2026

PODCASTS

Podcast: How an Ohio banker talks with policymakers about stablecoin issues

May 6, 2026

Podcast: Tech transformation and AI to power bank growth

April 29, 2026

Podcast: ABA’s ecosystem strategy to tackle fraud

April 22, 2026

American Bankers Association
1333 New Hampshire Ave NW
Washington, DC 20036
1-800-BANKERS (800-226-5377)
www.aba.com
About ABA
Privacy Policy
Contact ABA

ABA Banking Journal
About ABA Banking Journal
Media Kit
Advertising
Subscribe

© 2026 American Bankers Association. All rights reserved.

No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive

© 2026 American Bankers Association. All rights reserved.