In what felt like an instant, the economy was virtually put on hold, leaving millions of people concerned about their employment and financial health. Adding to this anxiety is the uncertainty of when our social restrictions can ease and people will be able to get back to work. While we’re not sure what the economy will look like when we come out the other side, our concerns are collective — financial distress is being felt across generations, income levels and regions.
We conducted a research study of 1,068 adults March 17-18, 2020, and found that more than half (53%) of Americans are being negatively affected financially by the economic fallout of the COVID-19 pandemic. Of this group, 73% of them are worried about their ability to pay their current bills and loans. They also estimate they’ll be, on average, about $900 short when trying to pay bills. Reduced working hours, outright job loss and small business shutdowns are obvious contributors to this sudden rise in financial struggles.
All generations share financial concern due to the pandemic, but it’s interesting to see that Gen Zers and Millennials have the highest rate of negative financial impact in the first week of our survey. Sixty-two percent of Gen Zers and 69% of Millennials said their household income has been affected. These younger generations are still earlier in their professional careers and have had less time to build healthy savings, which can further add to the financial distress of their reduced earnings.
That said, Gen Xers and Baby Boomers are not without worry. Our survey indicates over half of Gen Xers (57%) have seen a reduction in their household income. This comes as they’re reaching the peak of their working career or making plans for retirement. Fewer Baby Boomers report an impact on their income (35%), which is likely because there are more retirees in this age group. However, many now face potential volatility in their retirement portfolios.
The findings in our survey may seem ominous, but they show we’re all facing these challenges together. You’re not alone if you’re feeling uneasy about finances during this unprecedented time. We hope this data, which we’ll update weekly on this page, will help give clarity around consumer sentiment and financial health in our rapidly changing economy.
As people grapple with sudden changes to their financial health, businesses are simultaneously trying to adapt and productively serve their customers. We’re already starting to see lenders provide more flexible policies and terms for their customers. Some are allowing people to defer payments, forgo interest charges and waive late fees. It’s encouraging to see businesses rising to the challenge of supporting American consumers as we all persevere together through the pandemic’s economic impact.
If you, like many others, are concerned about your ability to pay your bills in the coming weeks, we’ve created a guide, “Managing Your Credit Through a Financial Hardship”, which can help you learn how to protect your credit during times of financial trouble. And during this uncertain time, as always, we at TransUnion are committed to continuing to provide you the updates, tools and resources you need to help you stay in control of your credit health.