Reports and blogs

This research is written for the public to understand important economic concepts. 

Making Ends Meet reports and blogs

Making Ends Meet in 2023: Insights from the Making Ends Meet Survey (with Eric Wilson, Zoe Kruse, Emma Kalish, and Isaac Cotter)

Summary: Pandemic relief improved many consumers’ finances in 2020 and 2021, but in 2022 financial stability and health deteriorated across a range of measures. Using the 2023 Making Ends Meet survey, we show that in 2023 consumers were still on average somewhat better off financially than they were in 2019 but the trend is negative. Financial well-being was unchanged between 2022 and 2023 but more families had difficulty paying their bills. Income variability declined in 2023 but remains higher than in 2019. More families are unprepared for even a short interruption of income. Renters and consumers with student loans were particularly vulnerable to income disruptions and frequently had difficulty paying bills even before federal student loan payments resumed. Yet substantial liquidity remains for many consumers. Meanwhile, large disparities in financial stability and health continue across income, racial, and ethnic groups. Access to credit remains difficult for many consumers particularly Black and Hispanic consumers. 
Summary: This report explores the consumer financial profiles of Buy Now, Pay Later (BNPL) borrowers using the Bureau’s Making Ends Meet survey and its association with credit bureau data. While many BNPL borrowers who we observed used the product without any noticeable indications of financial stress, BNPL borrowers were, on average, much more likely to be highly indebted, revolve on their credit cards, have delinquencies in traditional credit products, and use high-interest financial services such as payday, pawn, and overdraft compared to non-BNPL borrowers. BNPL borrowers had higher credit card utilization rates and lower credit scores. However, many differences between BNPL borrowers and non-borrowers pre-date BNPL use. Further, contrary to the widespread misconception, BNPL borrowers generally have access to traditional forms of credit. In fact, they were more likely to borrow using credit and retail cards, personal loans, student debt, and auto loans compared to non-BNPL borrowers. Finally, the report estimates that a majority of BNPL borrowers would face credit card interest rates between 19 and 23 percent annually if they had chosen to make their purchase using a credit card.

Making Ends Meet in 2022: Insights from the CFPB Making Ends Meet survey (with Samyak Jain, Greta Li, Elizabeth Saunders, and Eric Wilson)

Summary: In 2022, consumer financial health continued to be buoyed by pandemic relief, high employment, and increased savings accumulated during the first year of the pandemic. But financial health was no longer as high as it was during the first year of the pandemic. Average financial well-being had returned to its 2019 level. More families were having difficulty paying all their bills in 2022 than in 2021. Income variability increased and consumers were using high-cost credit products at pre-pandemic levels, after a substantial drop in 2021. The finances of Hispanic consumers, renters, and consumers under age 40 deteriorated rapidly between 2021 and 2022. Meanwhile, substantial disparities in making ends meet continue. Black, Hispanic, and low-income consumers are far more likely to have difficulty paying bills and are more likely to be turned down for credit or not apply because they fear being turned down. Looking to the future, many consumers are unprepared for an economic downturn, should one occur. If they lost their main source of income, 37 percent of households could not cover their expenses for more than a month. Half of Black and Hispanic households could not cover their expenses for more than a month.
Summary: The past two years of high inflation have been difficult for renters. In our recent report, Making Ends Meet in 2022, we found that nearly one third of renters did not pay or were late with the rent at least once in the last year. As we discussed in a previous blog post in this series, housing is a large share of overall expenditures and housing inflation has been a big part of recent inflation. Rents have increased rapidly in many areas. At the same time, the cost of buying a home has increased, pricing out many potential homebuyers.
In this blog post, we begin with the challenges of high rent inflation and ask whether renters who missed payments were able to take advantage of pandemic-related rental assistance. We then discuss rates of transition into homeownership—which can protect consumers from rising rents—and how they differ by race and ethnicity. And we conclude with some of the drawbacks and potential risks of homeownership, especially in situations where housing values may fall.
Summary: Inflation was higher over the last year than it’s been for nearly 40 years. Prices for many things have been rising. But not all prices rise at the same rate, so how someone experiences inflation depends on what they buy, how their income has changed, and what they own. This post considers one area where inflation experiences differ sharply: housing.
Summary: Despite a massive increase in unemployment starting in March 2020, consumers’ average financial situation improved in the first several months of the pandemic and continued to improve through June 2021. We use three waves of the Bureau’s Making Ends Meet survey and its association with credit bureau data to understand how consumers have managed during the pandemic. We find that pandemic assistance policies such as expanded unemployment insurance and loan flexibilities are responsible for many of these improvements. Consumers were much more likely to face a significant reduction in income during the pandemic than before. But unemployment insurance kept consumers with income drops from facing financial hardship. Consumers who did receive pandemic-related flexibilities generally faced financial hardship. But some pandemic-related flexibilities and forbearance programs failed to reach many consumers facing hardship. Most pandemic polices—including extended unemployment insurance, eviction moratoria, and mortgage and student loan flexibilities—have recently ended or will end soon. Our results suggest these programs helped protect consumers during the pandemic, so their expiration may lead to increased consumer distress unless the economic recovery is strong and equitable enough to make up for the loss of protections.
Summary: In this research brief, we examine the prevalence, persistence of use, and alternate credit sources available for consumers who use payday, auto title, and pawn loans. We use the first two waves of the Bureau’s Making Ends Meet survey, conducted in June 2019 and June 2020, to examine how consumers use these services over time. The survey is associated with traditional credit bureau data, allowing us to examine other credit characteristics such as whether these consumers appear to have readily available credit on credit cards. The Making Ends Meet survey thus gives us a rare opportunity to combine a survey of the same consumers over two years with credit record data to understand consumers’ decisions about debt.We find that consumers who use a payday, auto title, or pawn loan in one year are often still using that type of loan a year later. Some users of these services have lower cost credit available on credit cards, while others lack access to traditional credit. Among payday, auto title and pawn loan borrowers who experience significant financial shocks, the costs of these shocks often exceed other possible sources of funds.

Research reports and blogs

Summary: After falling during the pandemic, the share of consumers with a delinquent credit card has increased rapidly since 2021 and is now higher than in 2019. While consumers with delinquencies clearly show signs of struggling, news reports have taken the rising delinquency rate as a sign that financial distress is becoming more widespread, suggesting underlying weakness in the U.S. economy. We show that rather than being a sign of broader distress, this increase in delinquencies is explained by a substantial increase in the riskiness of recently issued credit cards.Delinquencies have been concentrated among credit cards originated in the last few years and we show these credits cards were much riskier than in previous years. Two factors explain this extra risk: First, lending standards loosened a bit in 2021 and 2022 judging by a decline in credit scores at origination. At the same time, pandemic aid and forced savings pushed average credit scores up sharply. Effectively, by not tightening significantly, lenders were originating cards much further down the risk spectrum. We show this shifting risk composition explains why delinquencies are higher than in 2019.
Summary: For creditors, the final recourse to collect an unpaid debt is typically to sue the consumer in state civil courts. If the creditor wins the suit, the resulting “civil judgment” will often give the creditor the right to garnish wages or seize bank accounts, homes, cars, or other property to pay off the debt. Defendants in debt collection suits usually do not have counsel. Default judgments, in which the court finds for the creditor without ever hearing from the defendant, are common.Civil judgments are public. These dry court records tell tales of people in financial distress. For example, John was sued for about $1,400 last year.1 After a default judgment allowing wage garnishment, the court ordered his grocery store employer to start garnishing some of his $16 an hour wage. It appears he left his job or was fired several months later. Because the creditor may not have collected much money, he may remain at risk of wage garnishment at his next job until the judgment is paid in full.Despite their importance in the lives of struggling consumers, understanding civil judgments has been hampered by limited data. Our new working paper  fills this gap by using credit bureau data to study civil judgments and their relationship to wage garnishment laws. In this blog post, we show that civil judgments are both common and unequally distributed.

U.S. Consumer Holdings and Use of $1 Bills (with Claire Greene and William Murdock III)

Summary: Small denominations play a special role in a payments ecosystem because they facilitate exchange for small-value goods and services. This report examines the $1 bill holdings of adults in the United States using data from the Diary of Consumer Payments Choice (DCPC). Simply knowing the number of $1 bills in circulation is not useful for understanding consumers' actions, since many of these bills are held by merchants. The costs and benefits to the consumer of carrying $1 bills have been largely ignored in the policy discussion of the costs of switching from dollar notes to dollar coins. Knowing the facts about U.S. adult consumers' holdings of $1 bills represents a first step toward gaining an understanding of these costs and benefits to consumers.