How have people been financially impacted by the coronavirus pandemic?
The COVID-19 pandemic has created a lot of economic uncertainty both on a national and individual level. To date, tens of millions of people have filed for unemployment. For the last two months, unemployment rates hover around 13 to 14 percent. Despite many beginning to return to work as states reopen, millions of people have lost their livelihoods. As a result, these Americans worry about what the future will bring.
People feeling financial pressure
According to a Pew Research Center survey in April 2020, “financial concerns are not felt equally by all Americans.” Their survey found 59% of lower-income adults said they worry almost every day about the ability to pay their bills. In contrast, just 15% of upper-income adults said they have these fears. At the beginning of 2020, 57% said they felt the U.S. economy was “excellent” or “good”, but now, half-way through the year, just 23% of survey participants feel this way.
Financial setbacks due to COVID-19
Fast-forward to June and now these financial worries still affect lower-income Americans, but also has reached the middle and upper-income earners as well, according to a separate survey as reported by CBS News. The survey, conducted by Rand Corp. found the following results.
- 50% of respondents earning less than $25,000 per year said they struggle to pay bills.
- One-third of respondents earning between $25,000 and $125,000 said they can’t pay all their bills.
- One in 10 respondents earning more than $125,000 also can’t meet their bills.
Since the COVID-19 pandemic swept through the U.S., people who have lost jobs or taken pay cuts are looking for alternate ways to make ends meet.
How are Americans paying their bills?
Some Americans used the stimulus payment from the CARES Act they received to pay bills. Others also dipped into their savings accounts to make ends meet while they are out of work. However, Pew Research Center findings also uncovered just 23% of people say they have three months’ worth of emergency funds. As the pandemic passes the three-month mark, what are they doing?
- Bank loans
- Credit cards
- Stimulus payments
- Payday loans
- Borrowing from family and friends
- Selling their belongings
Unfortunately, the current economic system is forcing people to take on additional debt they can’t afford. The CARES Act has provided some relief, but many of these measures will begin to expire in July 2020 when the $600 unemployment benefits run out. Deferments of student loans and mortgage forbearances will also end within the next few months.
What the future brings is still uncertain since there is no clear prediction about the rebounding of the U.S. economy. The events of this summer will be more telling, which will largely depend if a second wave of coronavirus sweeps the U.S. and its severity.
PRBC offers people a chance to prove to lenders they’re reliable and credit-worthy. If your credit was hurt during the COVID-19 pandemic, preventing you from accessing loans or credit with the best rates, contact us today to learn how alternative credit score can get you back on track.