The Big Idea: Scott Fulford

How was the state of your wallet during the prime pandemic years? As Scott Fulford explains in this Big Idea for The Pandemic Paradox, for many Americans it was not nearly as bad as it could have been, and indeed, possibly the opposite.


The novel coronavirus suddenly seemed to be everywhere in March 2020. We didn’t know much yet about how to treat it, how it spread, or how deadly it was. To halt its spread, many businesses shut down, furloughing or sending employees home to figure out how to work remotely. Twenty-two million people were fired over the next month. Others had to keep going to work in person, facing terrifying new risks. As our workplaces, churches, schools, and daycares shut down, we were increasingly isolated, cut off from social connections.

My wife and I spent the pandemic juggling two full-time remote jobs and our two small boys who were four months and four years old at the start of the pandemic. We sewed (bad and uncomfortable) masks out of an old pillow case and baked (delicious) sandwich bread when we couldn’t buy any at the store. We worried about our kids who seemed to be growing up thinking grandma was an interactive video.

But I also worried about the financial misery that millions of families were about to experience. As an economist, I study the financial ups and downs that people face and how they deal with them. A survey I’d conducted the year before the pandemic found that 40 percent of families could cover their expenses for less than a month if they lost their main source of income.

As unemployment reached a level we hadn’t seen since the Great Depression, my research suggested that financial pain was soon to come. And it would spread, as unemployed families reduced their spending, causing more businesses to lay off staff.

But here’s the surprise and the big idea for my book: the financial health of the average U.S. household actually improved from January 2020 to June 2020 by just about any measure. Of course, some households were doing worse financially than before the pandemic and there was a great deal of unfairness—from essential workers who would have been better financially if they had been fired to small business funding that often bypassed Black-owned businesses but helped larger, less affected, white-owned businesses. But on average, most households were doing better financially.

How did this paradox arise? While the full story is more complicated, it largely comes down to two surprises.

The first surprise was the effective policy response. The federal government spent around five times as much in response to the pandemic as it did following the 2008 financial crisis. That money supported the newly unemployed, sent most U.S. residents thousands of dollars whether they were unemployed or not, and gave money to almost all small (and many not so small) businesses.

The second surprise was that many people spent less. They didn’t go on vacations or go out to restaurants or do so many other things that make life fun. Because of the effective policy response, most households’ incomes didn’t go down, so savings built up, helping protect more people from financial shocks. People later spent some of that money buying stuff, causing the epic supply chain snarls and inflation in 2021 and 2022.

My new book, The Pandemic Paradox: How the COVID Crisis Made Americans More Financially Secure, explains this paradox and the many other changes wrought by the pandemic. In the months following March 2020, I conducted more surveys and briefed government officials about what was going on so they could make informed decisions. Everyone was hungry to understand the rapidly changing world. I realized that the work I was doing—explaining what we knew, and often did not know, about the economic and social changes occurring—could help others understand the new world.

Economics has surprising overlaps with speculative fiction. Economics is most often asking the question: “What if?” For example, it’s impossible to ask: “What did the pandemic change?” without implicitly asking: “What if the pandemic didn’t happen?” And good speculative fiction is often built around the same question by imagining a world where different technologies or magics exist and asking: What would be different and how would society work?

Of course, good speculative fiction has to then tell a good story, while good economics does not. In my book, I wanted to bridge this gap by connecting bigger societal changes to individual stories. So I drew on the surveys I conducted to tell some of the individual stories that make up the big story of this crazy time. The story of Sofia (not her real name) whose finances were precarious after she lost her job in March 2020 and missed a mortgage payment but, with the help of expanded unemployment and other relief, was financially better off in June 2020 than before the pandemic. Of Marcus, who also lost his job, but who pandemic aid policies missed and ended up selling his possessions to make ends meet. And of Marvin, who retired early after being fired and was worried his savings wouldn’t last.

After all, the story of the pandemic is millions of individual stories, combining and interacting in surprising ways. Some stories were painful and sad. Other stories were about new freedoms, such as new financial stability, starting a new business, or the flexibility of remote work. We all had our unique pandemic experience and I hope the book helps us understand each other’s experiences, and the pandemic’s larger consequences for our economy and society. 

The views expressed here and in the book are the author’s and not necessarily the views of the Consumer Financial Protection Bureau or the United States.

The Pandemic Paradox: Amazon | Barnes & Noble | Bookshop | Princeton University Press  

Author socials: Personal site | Twitter

8 Comments on “The Big Idea: Scott Fulford”

  1. I think we’ll see similar results re: the more generous measures the Canadian federal government undertook in response to the start of the global health emergency declaration re: COVID-19. If they haven’t already been published, that is…?

    The Canada Emergency Response Benefit (for one example) was a life-preserver for millions of us up here in Canada.

  2. Certainly true here. Granted, I had other non-Covid related health issues that cropped up at the same time, which kept me mostly indoors for months, but basically we stopped doing anything but go to the grocery and occasionally pick up food at local restaurants. And yes, financially we were fine before but way more fine after the pandemic.

  3. I was (still am) retired, and I felt that my finances weren’t being affected by the Pandemic, so I donated all my pandemic relief funds to local charities. Afterward, of course, I was affected by inflation, mostly at the grocery store.
    While I’m definitely better off financially than before the pandemic, it is because of an inheritance that would have happened anyway.

  4. So giving people a guaranteed income makes them more financially secure. Hey Governments- are you listening?

  5. Some Americans. And some Americans got help through tax credits and increases in SNAP benefits that have foolishly been allowed to expire.

  6. (and some Americans did what is effectively war profiteering, including some of the “inflation” of groceries; I’d love to see regulations against profit margins over X% on especially the non-luxury nearly-monopolized-markets food items.)

  7. And the person more responsible than anyone else for the effective US government response? Nancy F**** Pelosi, the best American politician of the 21st century and maybe the greatest Speaker of the House.

  8. But here’s the surprise and the big idea for my book: the financial health of the average U.S. household actually improved from January 2020 to June 2020 by just about any measure.

    That’s an interesting endpoint to choose.

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