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Working Paper
Household Financial Distress and the Burden of ‘Aggregate’ Shocks
In this paper we show that household-level financial distress (FD) varies greatly and can increase vulnerability to economic shocks. To do this, we establish three facts: (i) regions in the United States vary significantly in their “FD-intensity,” measured either by how much additional credit households can access or how delinquent they are on debts, (ii) shocks that are typically viewed as “aggregate” in nature hit geographic areas quite differently, and (iii) FD is an economic “pre-existing condition”: the share of an aggregate shock borne by a region is positively correlated ...
Working Paper
Household Financial Distress and the Burden of 'Aggregate' Shocks
The goal of this paper is to show that household-level financial distress (FD) varies greatly, meaning there is unequal exposure to macroeconomic risk, and that FD can increase macroeconomic vulnerability. To do this, we first establish three facts: (i) regions in the U.S. vary significantly in their "FD-intensity," measured either by how much additional credit households therein can access, or in how delinquent they typically are on debts, (ii) shocks that are typically viewed as "aggregate" in nature hit geographic areas quite differently, and (iii) FD is an economic "pre-existing ...
How Will COVID-19 Affect the Spending of Financially Distressed Households?
Consumer spending will drop substantially due to COVID-19, and the declines will hit hardest in households already in financial distress.
Reopening the U.S.: Gauging the Trend of COVID-19 Transmissions
An analysis suggests that counties accounting for the vast bulk of U.S. GDP aren’t yet seeing a downward trajectory in COVID-19 cases, but growth rates have generally slowed.
Journal Article
Debt Levels Continue to Grow in Eighth District’s Key Metro Areas
Consumers keep borrowing, but delinquency rate data do not appear to signal a severe debt problem on the horizon.
How will COVID-19 Affect Financial Assets, Delinquency and Bankruptcy?
Communities with greater financial distress will face larger income shocks caused by COVID-19 and are less prepared to weather them, while also being more likely to go into further financial distress as the pandemic continues.
Working Paper
The Effects of Macroeconomic Shocks: Household Financial Distress Matters
When a macroeconomic shock arrives, variation in household balance-sheet health (captured by the presence of financial distress "FD"), leads to differential access to credit, and hence a distribution of consumption responses. As we document, though, over the past two recessions, households in prior FD also experienced macroeconomic shocks more intensely than others, leading to a distribution of shock severity. Thus, quantifying the importance of both dimensions of heterogeneity (FD or shock-severity) for consumption requires a structural model. We find that heterogeneity in FD matters more ...
COVID-19 and Financial Distress: Vulnerability to Infection and Death
Although COVID-19 initially spread faster in areas with low financial distress, evidence suggests that infections may spread most rapidly in highly financially distressed areas moving forward.
How Spread Out Is the U.S. Population?
Half the nation’s population lives in less than 5% of its counties.
Working Paper
Consumption in the Great Recession: The Financial Distress Channel
During the Great Recession, the collapse of consumption across the U.S. varied greatly but systematically with house-price declines. We find that financial distress among U.S. households amplified the sensitivity of consumption to house-price shocks. We uncover two essential facts: (1) the decline in house prices led to an increase in household financial distress prior to the decline in income during the recession, and (2) at the zip-code level, the prevalence of financial distress prior to the recession was positively correlated with house-price declines at the onset of the recession. Using ...