Americans’ Financial Resilience during the Pandemic

How household wellbeing responds to pandemic-induced financial shocks likely depends on whether people undertake certain actions that enhance their ability to withstand adverse economic events, along with their ability to efficiently respond to the shocks when they occur. This paper examines Americans’ financial robustness during the Covid-19 pandemic, using an index of financial resilience and a measure of financial fragility derived from household surveys of persons age 45-75 in spring of 2020, and in May-June 2021. We estimate the factors associated with resilience and fragility in both years, show how these two measures changed a year into the pandemic, and consider whether resilience in 2020 led to better outcomes in 2021. We conclude that higher initial levels of resilience were, in fact, associated with lower levels of financial fragility a year into the pandemic. These findings suggest that policies and programs that enhance financial resilience can help low and moderate-income households withstand economic shocks and be able to better address unexpected income needs