Household differences and why they matter

The pandemic’s uneven impact on households

Most people who could work from home during the pandemic kept their jobs and saw little or no interruption to their income. Meanwhile, public health measures to contain the virus severely affected some services—like restaurants, accommodation, travel and entertainment. Many people in these sectors lost income. The impact was most severe for low- wage workers, especially women and young people.

The effects of the pandemic on employment have been larger and more unequal than those of past recessions. Still, many households across income groups are emerging from the crisis with improved financial health. This is due to the extraordinary supports that were available during the pandemic as well as limited opportunities to spend during lockdowns. The strong recovery of the labour market overall has also been an important factor.

Despite these positive developments, however, important risks remain. These include relatively high household debt levels and high inflation.

In fact, because inflation is high and the economy is running at full capacity again, in early March we raised our policy rate and said we expect it will need to rise further. Throughout that process, we’ll be watching developments related to household finances closely, thanks to the data and tools that have been useful during the pandemic.