Fed Survey: COVID-19 Continues to Disrupt Economic Conditions in Low- to Moderate-Income Communities

ST. LOUIS — A national Federal Reserve survey of organizations serving low- to moderate-income (LMI) communities shows that 17 months into the COVID-19 pandemic, many conditions—from those involving small businesses to services for children—were still worse than they were before the pandemic.

Perspectives from Main Street: The Impact of COVID-19 on Communities and the Entities Serving Them is a Fed survey of U.S. government agencies, nonprofits, financial institutions and community organizations. In collaboration with eight national partners, the survey was administered in August 2021 and resulted in 3,681 respondents from urban, suburban and rural areas.

Key findings:

• Economic Conditions: When asked about the peak of distress, 86% of respondents indicated COVID-19 was a significant disruption to the economic conditions of the communities they served, while 44% indicated experiencing significant disruptions at the time of the survey period.
• Small-Business Disruptions: 60% said COVID-19 was causing a significant disruption to small businesses, with 81% saying the latest conditions were still worse than they were before the pandemic.
• Disruptions to Services for Children: More than half of respondents (57%) said COVID-19 was causing a significant disruption to services for children, with 77% noting that conditions were still worse than they were pre-pandemic.
• Disruption to Financial Stability: 94% said COVID-19 was causing disruptions (51% said significant disruptions) to financial stability, with 78% reporting that conditions were still worse than they were pre-pandemic.
• Time to Recovery: Across almost all categories, half of the respondents estimated it will take one to three years to return to pre-pandemic conditions. Almost a quarter of respondents noted that it would take four or more years for housing stability to return to pre-pandemic conditions.
• Critical Resources: More than 60% of respondents noted that federal stimulus checks, small-business support, unemployment benefits and rent relief were critically important for the people and communities they serve.
• Demand for services: When asked how COVID-19 has affected their organizations, almost 70% of respondents said demand for services increased. At the same time, almost half of the organizations noted a decrease in their ability to serve.

“The COVID19 pandemic has had a disproportionate negative impact on historically underserved communities and communities of color,” said report co-author Nishesh Chalise, director of community-based policy and analysis at the Institute for Economic Equity at the Federal Reserve Bank of St. Louis. “In addition, community-based organizations that are key to promoting resilience in these communities have also been affected. Although things have been looking better, to foster an equitable recovery, it is important to monitor the conditions of these communities and the organizations serving them. With this survey, we hope to advance analysis and dialogue to inform a pathway to economic recovery for the ones most impacted.”

About Federal Reserve Community Development

Under the Community Reinvestment Act, LMI refers to communities in certain geographies with income levels between certain ranges, as determined by the Census Bureau. A low-income community means there is a median family income of less than 50% of the area median income. A moderate-income community means the median family income is at least 50% and less than 80% of the area median income.

The Federal Reserve seeks to promote the economic resilience and mobility of individuals and communities throughout the U.S., including LMI and underserved households. Increasing economic opportunity is not only good for individuals and communities but also vital to the overall economy.

To view the full survey and report, please visit https://fedcommunities.org/data/main-street-covid19-survey-2021/.