Many Americans Were on Shaky Financial Ground When Virus Hit

Shutterstock

 

Connecting state and local government leaders

This is underscored by a new report from the Federal Reserve, which also highlights how job losses during the coronavirus outbreak have been severe for lower earners.

Many households already had fragile finances before the coronavirus outbreak upended the economy, and lower earners are now among those taking the hardest hits when it comes to unemployment, new survey research from the Federal Reserve shows. 

Millions of American workers have been thrust into new financial uncertainty as they have lost their jobs and seen hours and earnings cut in recent weeks. Small businesses are also reeling.

Almost 3 million people filed unemployment claims last week, the Labor Department said on Thursday, driving the number of people who’ve applied for unemployment insurance benefits during the past two months to around 36 million.

Unemployment is near 15%, a level not seen since the Great Depression era.

A part of the new Fed report features survey results from April that gauge how the coronavirus was affecting household finances at that time.  

From the start of March through early April, 19% of adults reported either losing a job, getting furloughed, or having their hours cut. Among this group, upwards of one-third said they anticipated having difficulty paying their bills in April.

Job losses were especially severe among lower-income workers. Thirty-nine percent of those working in February who had a household income below $40,000 reported a job loss in March.

Only 64% of people experiencing employment disruptions said they expected to be able to pay all of their bills in full in April, compared to 85% of those working as they had been previously.

These troubling findings about the downturn’s effect on low-income earners in part could reflect long standing economic instability for many families. 

The report says that in late 2019 about 75% of adults were either doing okay or living comfortably financially, a statistic unchanged from the prior year and up 13 percentage points from 2013.

But last year, prior to the onset of the coronavirus outbreak, 16% of adults said they did not expect to pay all of their monthly bills in full at the time when they were surveyed in October. 

Another 12% said they would be able to cover their current bills, but would be unable to do so if they were confronted with an unexpected $400 expense they had to pay.

People without college degrees, racial and ethnic minorities, and those carrying unpaid debts, including medical and legal bills, were more likely last fall to be struggling with monthly expenses, or in a weaker position to handle financial setbacks, the report says.

Among the subset of people who expected to defer at least one bill in the month when they were surveyed, 45% said this was likely to involve not paying a credit card bill, or making a partial payment. But 23% said they would not pay, or would only partly pay, their rent or mortgage and nearly one-third said the same about utility bills.

The survey also found that, as of late last year, 53% of people had set aside emergency savings or “rainy day” funds. But 3-in-10 adults said that if they lost their main source of income, they would not be able to cover three months of expenses by any means.

A possible bright spot with the survey is that about 90% of respondents who’d lost their jobs in recent months said their employer indicated that they would be able to return to their positions in the future.

The financial toll of the virus could also have implications for retirement savings. Late last year, one-quarter of non-retired adults surveyed said they didn’t have anything saved for retirement. Fewer than four-in-10 felt their retirement savings were on track.

In recent weeks, governments across the U.S. have ordered businesses to close and told people to stay home to help prevent the spread of the coronavirus. Some states are now rolling back those restrictions, but the economy is still sputtering along.

A full copy of the Federal Reserve’s report can be found here.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.