The national unemployment rate stood at 3.9% in April, aligning with pre-pandemic levels. New England's unemployment rate was even lower at 3.3%. According to MIT economist David Autor, the tight labor markets during the pandemic resulted in rising wages for low-paid workers, reversing a four-decade trend of increasing inequality between low- and high-wage workers. The Biden administration has emphasized that the recovery from the pandemic-induced downturn is one of the most equitable in recent history.
However, despite these positive indicators, several concerning trends persist both regionally and nationally. Housing costs have increased, and homelessness and evictions are on the rise in New England. Additionally, personal debt has grown.
As these trends develop, many relief measures that mitigated the pandemic's impact on household economic security are expiring or have ended. This is particularly troubling for low- to moderate-income (LMI) populations who benefited significantly from such aid. The Federal Reserve Bank of Boston closely monitors this data.
The Boston Fed’s vision is “an inclusive economy that works for all.” To achieve this goal, it is crucial to pay attention to data reflecting conditions for LMI populations. While there is good news, there are also reasons for concern.
Fiscal policymakers and the Fed employed various tools to ease the pandemic's impacts effectively. Rent moratoriums and mortgage forbearance kept people housed; increases in food assistance programs prevented hunger; and lending facilities established by the Fed preserved jobs by maintaining credit flow to businesses. The loss of these supports poses significant challenges for LMI households across New England amid current trends.
The "U-6" unemployment measure provides additional insight as it includes individuals marginally attached to the workforce—those not working and who stopped looking for work within the last year. In April, the U-6 measure placed national unemployment at 7.4%, nearly double the standard measure and its highest level since November 2021.
Credit card debt has also surged, reaching $1 trillion in the U.S. last year for the first time—a notable figure driven by rising wages and income, increased consumption, and inflationary pressures that began during the pandemic. However, accompanying this milestone is a rise in credit card delinquencies—a stark contrast to 2021 when Americans rapidly paid off credit card debt using stimulus money while avoiding large expenses like vacations.
Overall, data indicate that LMI populations in New England and nationwide face pressure from multiple sources despite some positive economic news. The Fed can alleviate some strain through its tools to combat inflation but additional measures are necessary to support LMI individuals further.
Contact our media relations team: Marybeth J. Mattingly (Beth.Mattingly@bos.frb.org) or Amy Higgins (Amy.Higgins@bos.frb.org).
