Measuring Household Distress and Potential Policy Impacts

Abstract

struggling to meet their financial obligations (e.g., making loan payments). Yet housing markets and consumer spending have been strong, and personal bankruptcies and mortgage foreclosures are at multiyear lows. Expansive government policies that include income support, extended unemployment insurance, low interest rates, and relief from default or foreclosure may help explain low levels of reported distress. However, a major concern is that current policy measures are simply postponing rather than eliminating the household distress. To offer some insight, we created a national measure of household distress that allows comparisons over time and the ability to examine the importance of specific variables and policies.1 Perhaps surprisingly, we find that the Measuring Household Distress and Potential Policy Impacts