Pandemic economic recovery is still years away for low- and moderate-income families
The economic disruptions brought on by the COVID-19 pandemic are far from over for many low- to moderate-income families and organizations that serve them.
That’s according to the results of a nationwide survey conducted by the Federal Reserve System’s community development function, led by experts from the Federal Reserve Bank of St. Louis’s Institute for Economic Equity.
In August, co-authors Nishesh Chalise and Violeta Gutkowski asked support organizations questions about what kinds of economic distress the pandemic is currently causing within their communities. They found economic distress most significantly stemming from disruptions to small businesses, followed by child care services and then financial stability.
Chalise said most respondents indicated that people are still worse off than before the pandemic.
“Yes, it is better than the peak of distress, but compared to pre-pandemic there is still a long way to go,” he said. “And by their estimate it’s not in two months, three months. It’s considerably longer than that.”
More than half of respondents expect it to take between a year and three years to fully recover from economic disruptions and up to four years for people to recover from housing instability.
Meanwhile, almost 70% of respondents said demand for their services and the cost of providing them is still higher than pre-pandemic levels.
Chalise said one big challenge for economic recovery for this segment of the population is that many organizations that serve low- to moderate-income communities said they could operate in the current environment for less than a year before exhibiting financial distress themselves.
The report also found that government stimulus programs were a lifeline for many people.
“We were stunned about the high level of response with respect to how critical these resources have been,” Gutkowski said.
Roughly 60% of respondents said federal funds such as the child tax credit, stimulus checks and money for small businesses were very critical to their communities.
However, 80% said their people ran into challenges trying to get the help they needed. Roadblocks included eligibility and capacity issues, as well as the fact that the processes required access to the internet, were too complex and involved burdensome paperwork. Another problem was that people needed a good relationship with a bank.
Gutkowski and Chalise analyzed data at the national level, but they said there are no major differences between those findings and what’s happening in the St. Louis region.
Follow Corinne on Twitter: @corinnesusan