Some Americans Feel Positive About Finances, Others Are Less Confident
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Every other week, Equifax conducts a Consumer Credit Confidence Survey to measure consumers’ credit and personal finance concerns amid the Coronavirus/Covid-19 pandemic. What follows is an overview of the results from the fourth survey. Be sure to also take a look at the survey results for weeks one, two and three.
Some Americans are feeling better equipped to handle their personal finances during the Covid-19 pandemic, according to the latest installment of Equifax’s biweekly Consumer Credit Confidence Survey.
More respondents reported feeling productive in the latest survey than those who felt the same way two weeks ago (up to 18% from 13%). In addition, the percentage who say they are feeling anxious has dropped 4 points (from 29% to 25%) in the past month.
Overall, the number of Americans who are able to pay their bills remains at about 80%; however, the percentage of consumers who said they may not be able to pay off their student loan debt increased by 11 percentage points from our last survey. And, for those who have college tuition, 23% are worried about paying those bills in the fall, up from 19% two weeks ago. However, just 13% of respondents said they are worried about paying rent, down from 18% in the first week of the survey.
The latest survey results highlight the stark contrast between some consumers’ increasingly positive sentiments about their personal finances and the reality for others. Even though student loan payments have been paused until the end of September for the majority of federal borrowers, over 40 million Americans have lost their jobs over the past 10 weeks. When their loan payments resume in October — without additional legislation to extend the temporary forbearance — many are worried that they may not have the income to repay that debt.
Overall, the survey found that the number of Americans who are concerned or extremely concerned about the economic impact of the Covid-19 pandemic has, over the past six weeks, dropped to 60% (from 67%), while those who are unconcerned or extremely unconcerned has risen to 16% (from 12%). Importantly, as this survey was conducted between May 22 and 25, the results may not reflect consumer sentiment in light of recent events across the country.
The survey found that the percentage of respondents who have been permanently laid off has modestly increased over the past two weeks (from 5% to 7%), but there may be more layoffs to come. Because the Paycheck Protection Program (PPP) for small businesses covers only eight weeks of salaries, millions of workers could soon collect their final paychecks and start to apply for unemployment benefits over the coming weeks.
Interestingly, 65% of survey respondents have worked from home at some point during the pandemic, but only 8% of that subset have returned to their office/work location since efforts to contain the spread of the virus ramped up in mid-March.
And while the personal savings rate skyrocketed in April to 33% (up from 12.7% in March and 8.2% in February), the reasons people are saving seem to be changing. Just 24% of respondents said they are saving for a big purchase (down from 27%), while 53% are putting extra cash into an emergency fund (down from 58%), marking a notable difference from the first survey six weeks ago.
Only time will tell how consumer habits will ultimately shift in response to the prolonged impact of the pandemic, but early signs point to fundamental differences in how consumers will view their finances pre- and post-pandemic.