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The world has completed changed since COVID-19 hit in the beginning of 2020. We have experienced first hand just how quickly things change during a global pandemic. With the loss of income, increased health care costs and supply expenses, American’s financial health is a prime example of this roller coaster.
On March 23rd, LendEDU published a study of 1000 American adults to gauge how the coronavirus pandemic is affecting them financially. Over the next two weeks, we were inundated with news; some good, but most was disastrous. COVID-19 cases and deaths rose dramatically. Federal guidance was extended until the end of April at least, the largest economic stimulus package in American history was signed by President Trump, and an unbelievable 6.6 million Americans applied for unemployment benefits in a single week.
Seeing just how dramatic the day-to-day updates are, LendEDU published a followup survey on April 7th to track how these changes are affecting Americans financials. Unfortunately and not surprising, compared to the first survey from two weeks ago, the financial situation for most Americans is getting a lot worse due to the outbreak.
The second Coronavirus survey found that more consumers have dipped into their savings to cover expenses and are more concerned about retirement. However, on the bright side, recent student loan changes may be helping.
Below are the key findings and trends from the studies.
Unemployment:
With both large and small businesses shutting down and the economy heading towards a recession, the U.S. has seen a surge in unemployment in the wake of COVID-19. In the two weeks between studies, 10 million Americans have filed jobless claims. The rising unemployment trend is a major concern to the consumer economy because Americans without jobs will stop spending money.
- 12% of Americans have lost their jobs due to COVID-19 compared to just 6% from the first survey two weeks ago.
- 24% of Americans have seen no changes to their job compared to 35% the first time.
- 13% have been furloughed compared to 11% two weeks ago.
Higher Expenses
Around the country, grocery and convenience stores have empty shelves as Americans stock up on supplies and food in response to the global pandemic.
- Money spent on food and supplies increased by 88% from two weeks ago, going from $335.65 to $631.06.
Tapping Into Savings Accounts:
The combination of increase in expenses and less income means many are forced to dip into their savings and emergency accounts.
- 51% have had to use money from a savings account or emergency fund compared to 44% from the first survey.
- 63% of poll participants were concerned about running out of money in their accounts due to the Coronavirus and its impacts.
- Amongst those that recently lost their jobs, 88% were worried about running their bank accounts dry.
Stimulus Checks:
During the two week time period between the two surveys, the massive Coronavirus economic stimulus package passed. As part of the package, some Americans will receive a stimulus check, with the dollar amount varying depending on their income levels. The study shows that half of Americans will use these checks for food/supplies and mortgage/rent, while others will save, pay off debt or use for other purposes.
- 30% of eligible respondents will save the $1,200 payment, while 30% will spend it on food/supplies, and 20% will use it for a rent or mortgage payment. 7% will use it to pay down a debt.
Retirement:
With a the market volatility over the past month and economists fairly certain of an upcoming recession, American’s are becoming more and more worried about their retirement savings. This is especially true of older Americans, who have less time to see the market recover. These fears have grown from survey-to-survey as the situation worsens. In two weeks, there’s been an increase of 9 percentage points in terms of adult Americans that are worried about their retirement savings and a drop of 10 percentage points in terms of respondents that are not concerned.
- 72% are worried about their retirement savings now, compared to 63% from two weeks ago.
- March 18, 67% of Americans ages 55 and up were concerned about their retirement nest eggs. On April 1, that percentage for the same cohort increased to 71%.
A Silver Lining - Student Loan Changes May Be Helping:
Some of the aid provided over the past month has been to ease the burden of student debt. Interest rates on federal student loans are now frozen at 0% until September 30, 2020, while borrowers can also suspend their student loan payments during that time if needed.
According to the survey-to-survey results, it appears that the recent actions might be alleviating some stress amongst student loan borrowers.
- Over the course of two weeks, there was a small, but notable, drop in the percentage of student loan borrowers that are worried about making their monthly payments. Specifically, the percentage move from 63% on March 18 to 60% on April 1.
- The percentage of respondents that were not concerned increased from 32% on March 18 to 36% on April 1.
Click here for the second round full study results.
