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Material Hardship and Well-Being of U.S. Households at the End of 2021

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By Patrick Cooney, H. Luke Shaefer, and Samiul Jubaed


Over the past two years, the federal government has passed and implemented a set of unprecedented and robust cash-based safety net measures — most notably expanded unemployment insurance (UI), a series of economic impact payments (EIPs), and the expanded Child Tax Credit (CTC) — to support U.S. households during a period of widespread joblessness and economic uncertainty. Remarkably, a number of key metrics indicate that in large part because of this federal safety net response, U.S. households were in a better financial position in 2020 and much of 2021 than in 2019.

Despite this good news, most recent reports on the U.S. economy have focused on concerns that the financial gains experienced by households are being undone by price increases. Inflation has increased to levels not seen since the early 1980s. As a result, surveys of U.S. households show low confidence in the economy, despite low unemployment, the widespread availability of jobs, and large wage gains.

This brief returns to a series of measures of material hardship and financial well-being that we have followed since the early months of the pandemic, to see how American households were faring as of the most recent data available. We find that U.S. households — and especially low-income U.S. households — remained in a strong financial position at the end of 2021. Rates of material hardship worsened slightly in the final months of 2021 but remained comparable to 2020 levels. Available indicators of financial health and liquid assets of U.S. households remain substantially stronger than pre-pandemic levels.

In sum, though inflation remains of great concern to the American public, data indicate the economic and financial gains made by American households during the pandemic persisted through the end of 2021, despite rising prices. This is particularly true for low-income U.S. households. It is for this reason we argue that any discussion of inflation must be brought into conversation with, and balanced by, the historic success of the economic recovery, which has placed so many U.S. households in a strong financial position. This further means it will be important to track indicators of financial well-being and material hardship as the nation gets further away from pandemic safety net policies. In particular, early data from 2022 suggest the expiration of COVID-19 safety net policies, in particular the expanded Child Tax Credit, may negatively impact the financial well-being of families in the year ahead.

Key Findings

  • The COVID-19 era social safety net helped buffer many families against material hardship and the risk of poverty during a period of widespread joblessness and economic uncertainty.
  • The number of Americans with poor credit scores fell to the lowest rate in at least 16 years in 2021.
  • Available measures of liquid assets indicate low-income households had more cash on hand at the end of 2021 than in 2019, even after accounting for inflation.
  • Though inflation remains a great concern, it should be placed in the broader context of the historic success of the COVID-19 pandemic economic recovery.
  • Early evidence indicates that the end of monthly Child Tax Credit payments may lead to an increase in hardship and poverty during 2022.



Since the onset of the COVID-19 pandemic, numerous sources of data have told an unprecedented story of how the financial well-being of U.S. households was safeguarded during a period in which tens of millions lost work and an ever-changing virus has continued to drive economic uncertainty. While the story seems to be relatively straightforward, it is noteworthy because it represents a dramatic shift in the character of the U.S. social safety net. Over the past 25 years, the federal government has relied on a mix of means-tested or targeted income transfers that are often in-kind in form. During the pandemic, lawmakers flipped this system on its head, implementing measures that were primarily cash-based and far more universal. In doing so, we mounted the most successful response to an economic crisis in our nation’s history.

In addition to easing hardship, there is reason to believe the COVID-19 safety net has played a role in record job growth and wage increases for low-wage workers, further contributing to enhanced financial stability. During the Great Recession, the economy shed nearly 9 million jobs and left lasting scars on the U.S. labor market; it took a full six years before employment reached pre-recession levels. The COVID-19 recession officially lasted only two months but more than 22 million Americans lost work. Since April 2020, however, more than 20 million jobs have been added. In just two years, employment has risen to 1.3% below pre-recession levels, a benchmark it took five years to reach after the onset of the Great Recession. And February’s unemployment rate fell below 4%, a threshold our economy did not reach in any month between January 2001 and April 2018.

Despite these outcomes, in recent months concerns have mounted over rising prices. The question posed in this report is whether high inflation has neutralized the apparent success of the pandemic safety net. High inflation is indeed a cause for concern. This is particularly true for low-income households, who dedicate the largest share of their household budgets to necessities. However, despite rising prices, our read of the data is that the pandemic safety net was a historic success, reducing hardship and poverty, stabilizing households, and jumpstarting the economic recovery. The gains remained evident at the end of 2021.

The question now is how the gains made by so many U.S. households will persist. While rising prices are a pressing concern, of greater concern may be the withdrawal of safety net supports that have placed so many U.S. households in such a strong financial position. The expanded Child Tax Credit was one element of the pandemic safety net that seemed poised to become a permanent part of our social infrastructure, seeing as how in just six months the provision delivered on its promise to reduce hardship and income poverty in households with children. Columbia University’s Center on Poverty and Social Policy estimated the child poverty rate in December 2021 was 12.1%, down from 15.8% in June 2021, prior to the initial disbursement of monthly Child Tax Credit Payments. The estimated child poverty rate in January 2022, following the expiration of monthly CTC payments, rose to 17%, an increase of more than 40% in a single month. Similarly, hardship rose for those with children in the first months following the expiration of the Child Tax Credit, but not for those without children. The gap in hardship rates between adults with children and those without, which narrowed considerably in response to CTC payments, began to widen again.

Thus, while we see little discernable evidence that rising prices have cut meaningfully into the gains made by so many U.S. households during the pandemic, the elimination of the expanded Child Tax Credit might. Indeed, though the COVID-19 safety net programs have been a historic success, early signs indicate that these gains may reverse the further away we get from them.

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