COVID-19 Financial Hardship Study — Week 3

After a tumultuous couple of weeks, stay-at-home or shelter-in-place guidelines have become fairly standard across regions and people are coming to terms with a new economic reality. Businesses are being forced to close or adapting their services while consumers modify their habits. We’re all facing our own challenges, but we’re facing them together with patience. Some refer to this change in behavior and market climate as the “new normal.” It certainly doesn’t feel normal. And though our latest survey results indicate some settling in key areas we’ve been tracking, we’re also seeing changes in people’s perception of both their short- and long-term economic stability.

In week three of our survey, nearly 3 out of 5 (58%) Americans report being impacted financially due to the COVID-19 health crisis, consistent with our week two results (59%). Though we aren’t seeing the rate of overall financial impact rise, it does seem to be deepening for one group in particular: Gen X.

Gen Z and Millennials were hardest hit by the sudden COVID-19 economic fallout. However, as time passes, we’re seeing generational creep of financial distress. In week three, 64% of Gen X respondents reported that their household income is being affected, on par with the younger generations. This is likely driven by the increased rate of job loss among financially impacted Gen X, which rose suddenly to 15% after two weeks of consistency around 11%. Business revenues declined sharply and quickly as COVID-19 spread, with hourly and part-time workers seemingly furloughed first. But as the global pandemic continues to disrupt major industries, companies are making drastic cuts in an attempt to survive. This may be why we’re seeing Gen Xers now being furloughed or laid off.

As a whole, job loss rate increased from 16% to 18%, but respondents indicate less worry overall about ability to pay bills. The bills are still there – but the good news is the recently passed economic stimulus package may be at least temporarily reducing anxiety. Forty-three percent of people now say they plan to use these expected stimulus checks to make upcoming payments. This was the first week this option was available in our survey, and it immediately became the most popular choice. This extra money will provide some temporary relief, but it may not be a long-term solution given the average budget shortfall is $1060.

The stimulus package may make people less likely to rely on friends and family for financial support (17%) and may have clarified payment options: those who do not know how they plan to pay bills dropped from 22% to 15%. Since these checks are still weeks away from being deposited into accounts, many are still planning on tapping into personal savings to make up for reduced wages (37%).

It appears the economic stimulus has bought us all some time, even if only a matter of days. People now state it will take nearly 6 weeks before they run out of funds to pay bills, up from 5.4 weeks. However, with social distancing guidelines extended nationwide for another month, this timeline may be discomfortingly close for many Americans who are clamoring to get back to work.

The economy will eventually rebound, though maybe not as quickly as we’d like. In the meantime, we need to try to keep each other’s sprits high. Continue supporting businesses that have treated us well and bring value to our communities. Settle not into a “new normal,” but into our current reality, and take care of your physical and emotional needs. In times like these, you can feel more in control if you take proactive action around your finances. We strongly suggest you contact your lenders to ask about and enroll in their forbearance plans, if they’re offered, so you can manage your credit health. For additional education and guidance about how to minimize the potential negative impact of the COVID-19 pandemic on your credit, visit our COVID-19 website.