Economic Letter Video: Pandemic-Era Liquid Wealth Is Running Dry

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.

The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.

About the Authors
Hamza Abdelrahman is a senior economic analyst in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Hamza Abdelrahman
Luiz Edgard Oliveira is lead associate economist in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Luiz Edgard Oliveira
Adam Shapiro is a vice president in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Adam Shapiro