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St. Louis Fed: Financial distress increasing fastest in poorest ZIP codes

May 30, 2019

Although the national recovery has been positive since 2010 by nearly every aggregate measure, underneath this rosy narrative lies considerable differences at the ZIP code level within and across cities and states, according to new research from Federal Reserve Bank of St. Louis.  In The Unequal Recovery: Measuring Financial Distress by ZIP Code, authors Ryan Mather and Juan Sanchez analyze changes in wealth, debt, and financial distress across the country and over time, specifically looking at the percentage of people within a ZIP code that have reached at least 80 percent of their credit limit. They find that, despite improvements throughout the majority of the country between 2010 and 2015, financial distress accelerated in the period from 2015 to 2018. Importantly, they also find that levels of financial distress have risen fastest in the poorest ZIP codes since 2015, which increases their vulnerability to future economic downturns.