Opinion: Lower-income Americans threw the economy a lifeline during the pandemic
The coronavirus pandemic and ensuing lockdown steered the U.S. economy into a giant, figurative iceberg, threatening to take down everyone on board with it as it started to sink.
An unlikely lifeline appeared for the economy during the early weeks of the pandemic: low-income Americans.
Low-income Americans, who are regularly viewed in some quarters as a drain on the economy, might actually have been the ones keeping the economy alive and propping it up during that challenging early stretch.
With data from millions of daily financial transactions, including debit and credit cards, as well as ACH payments and prepaid debit cards, we can glean some interesting insights into spending behavior, one of which is the comparison between low-income and middle-income-and-above Americans over the past two months.
As more and more local and statewide lockdowns went into effect at the tail end of March, middle- and upper-income consumers went into a bunker mentality and reduced their spending by as much as 15% compared with the same period a year earlier. Check out this graph: