Pandemic Hardships Rise as Income Falls, Survey Shows

Lower-income households were more likely than high-income households to report that the COVID-19 pandemic hurt them economically more than they had expected, according to a TransUnion survey.

And hard-hit households said that time is dwindling before they won’t have enough money to pay all their bills and loans.

In its most recent survey conducted Sept. 30, the Chicago credit reporting agency added a question, asking respondents whether their household finances are tracking as planned this year.

Among all Americans, one-third said their 2020 household finances are better than planned, a third are as planned and a third are worse, “with stark variation among demographics,” TransUnion’s Oct. 9 Financial Hardship Report said.

Among households with incomes under $50,000 a year, more than 40% said they were experiencing more difficulty than expected. Among households earning more than $150,000, about 20% said their situation worse than expected.

Among hourly workers, 11% said the economic impact of the pandemic was “much worse than expected,” and 28% said it was slightly worse than expected.

Among salaried workers, 5% said the impact was “much worse” and 21% said it was slightly worse. The disparity was similar comparing those with college degrees and those without.

Based on its online survey of 3,102 adults, TransUnion said a quarter of all consumers have received a financial accommodation. “Those who say their household finances are better than expected are twice as likely to have used an accommodation as those who say their finances are worse, indicating accommodations have provided needed benefit to many,” the report said.

TransUnion found 51% of Americans are financially impacted by COVID-19, the lowest level since the study started in March. Impacts reported by respondents included:

• 13% with a small business that closed or its orders dried up.
• 18% said they lost their job.
• 19% said they had relied on a part-time job to supplement income.
• 26% said their partner had lost a job or had lost hours.
• 38% said their own work hours had been reduced.

“Worryingly, impacted consumers now estimate they have 5.4 weeks until they will not be able to pay their bills or loans,” the report said. “This is the shortest timeframe since March, driven by a significant increase in those who say they will not be able to pay within the next week.”

Those who said they won’t meet bills within the next week accounted for 21% of impacted households, up 7 percentage points since TransUnion’s previous survey conducted Aug. 26.

White consumers estimated they would start running short in 5.1 weeks, down from six weeks previously. Black consumers said they would run short in 5.5 weeks, down from 6.3 weeks.

More than half expected to fall short within four weeks of the Sept. 30 survey date. Here’s the breakdown for Sept. 30, compared with Aug. 26:

• 21% expect to fall short within the next week (+7 percentage points)
• 18% in one to two weeks (+1 point)
• 18% in two to four weeks (unchanged)
• 32% between one and three months (-5 points)
• 12% after more than 3 months (-2 points)

The top bill consumers were worried about paying was credit cards (38%), down from 44% in August.

The number of consumers planning to use savings to help pay bills and loans has been falling steadily since April, and stood at 26% in the Sept. 30 survey. Meanwhile, plans to use credit cards (19%) or a personal loan (16%) to pay bills were at the highest levels to date.

And 17% of impacted Americans said they did not know how they will pay their bills and loans.