More Americans Report Pandemic Hardships

The number of Americans reporting financial hardships from the pandemic has increased in the last month, with lower-income households experiencing more setbacks, according to a TransUnion report released Wednesday.

In its latest Financial Hardship Study, based on an online survey of 3,100 adults conducted Nov. 30, the Chicago credit reporting agency found 57% of respondents said they were financially impacted by COVID-19, the second month in a row that number has increased.

The hardship gap across income groups is at its greatest level since March.

The percentage of lower-income adults (those earning less than $50,000 a year) reporting impact from the pandemic was 62%, up 7 points from October and reaching its highest level since the surveys began in March.

Only 53% of higher income adults ($100,000+) reported an impact, down 2 points from October.

Among those impacted, more respondents reported they or a partner had lost their job. Job losses were reported by 29% of lower-income consumers, compared with 10% of higher-income consumers. However, 50% of higher-income consumers had their hours reduced, compared with 34% of lower-income consumers.

Among middle-income respondents, 34% reported job loss and 45% reported reduced hours.

Twenty-eight percent of lower-income, 15% of middle-income and 5% of higher-income impacted consumers said they didn’t know how they will pay their bills.

Impacted higher-income consumers were more likely to be tapping savings and using credit products to pay bills. They are also more likely to have an accommodation on a bill or loan (52%) than lower-income (25%).

“Nearly half of impacted lower-income consumers state they desperately need a stimulus check to get by, versus 23% of impacted higher-income consumers,” the report said.

Optimism about the future was shared by 46% of lower-income, 50% of middle-income and 68% of higher-income respondents.

“Understandably, impacted lower- and middle-income consumers are less optimistic about the future,” the report said. “They are also less likely to plan major purchases in the next three months, with marked differences in planned home improvement, vacation and holiday gift spend.”

Concern about ability to pay bills and loans among impacted consumers remains unchanged at 77%, a study high.

Their greatest worry (50%) was their ability to pay their rent or mortgage.

Ability to pay rent was a concern of 31% (+3 points), with the rate 42% (+5 points) among lower-income adults.

Impacted higher-income consumers increasingly stated they will be unable to pay their mortgage — 30% (+4 points). They also reported increased inability to pay auto loans (28%, +2 points), mobile phone (27%, +5 points) and utilities (27%, +3 points).

Nearly half of impacted consumers have cut back on discretionary spending (+6 pp). Additionally, fewer stated they are saving more in an emergency fund (-5 pp to 13%) or for retirement (-3 pp to 7%), or paying down debt faster (-3 pp to 11%). Impacted higher-income consumers are twice as likely than impacted lower-income consumers to save more in an emergency fund (21% vs. 9%) and pay down debt faster (18% vs. 9%).

More impacted lower-income consumers were cutting back on spending compared to impacted higher-income consumers. This includes reducing discretionary spend (50% vs. 42%), digital services (27% vs. 20%) and subscriptions or memberships (35% vs. 26%).

Like impacted lower-income consumers, impacted middle-income consumers were less likely to be paying down debt faster (8%) and are more likely to be reducing spending, including discretionary items (52%), digital services (25%), and subscriptions or memberships (32%).