In our Economic Letter, “Pandemic-Era Liquid Wealth Is Running Dry,” we look at the accumulation of “extra” liquid wealth by U.S. households during the pandemic and its eventual depletion. By late 2021, middle- and lower-income U.S. households had spent all of the extra liquid wealth built up during the pandemic. Higher-income households ran out of this additional buffer a few months later, by mid-2022. Now in 2024, the liquid wealth that U.S. households have is below their pre-pandemic projected paths. Additionally, credit card delinquencies have trended higher, surpassing their pre-pandemic levels. Smaller financial cushions and more missed debt payments may pose a risk to future consumer spending growth.
Watch our Economic Letter video with Luiz Edgard Oliveira, Lead Associate Economist, to learn about declining liquid wealth and the potential impacts on consumers.
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