It isn’t a shock that many Americans have struggled financially this year due to the global pandemic that infiltrated our shores. Bankrate has been taking surveys to find out exactly what Americans are thinking and feeling about their finances as 2020 is coming to an end. From school and work being moved online and the restaurant and entertainment industry having to make major adjustments, people’s income has taken a major hit. Bankrate’s last survey was back in July, however, and some of the statistics have changed since then.
They reported that half of the U.S. households has some sort of income loss due to Covid-19, with 1 out of every 4 Americans having to go on unemployment to collect income. Bankrate is reporting this as the worst economic recession since the Great Depression back in the 1930s, which had an unemployment rate of 25%. It has been around 9 months since the Nation started to shutdown businesses, and more than 2 out of every 5 households say that their bank accounts have yet to fully recover from the initial impact and loss of income.
A majority of those whose income was affected the most are Gen-Zs and Millennials in the workforce, especially if they are a person of color. Higher income workers are twice as likely to have fully recovered already. 47% of people who reported already having their income restored have a salary of $50k or higher, 30% of whom make over $80k. This is going to greatly affect local economies and in turn, our nation’s economy. Bankrate’s Chief Financial Analyst, Greg McBride, stated in an interview with NBCnews.com that, “Two-thirds of U.S. economic output is tied to consumer spending, so as goes the consumer, so goes the economy.” With Gen Z and Millennials not knowing where their next paycheck will come from, they are more likely to save their money rather than spend it on unessential goods.
Close to 90% of Americans, whether their income has been affected yet or not, report feeling worried that their, or someone in their household’s, income will be affected in the coming months due to Covid-19 cases being on the rise again and rumors of a second nationwide shutdown spreading. Sharon Miller, Bank of America’s head of small business, added, “This is a day by day, geography by geography, industry by industry type of recovery.”
It is not all bad news, as the percent of chief financial officers nationwide who would characterize the economic conditions as good rose from 1% back in June to 19% this quarter. Steve Gallucci, national leader of the U.S. CFO Program says he believes this optimism is a result of clarity surrounding the election, whereas back in June, everything surrounding the election was very unpredictable. NBC stated that in their article that they believe that “much of CFO’s forward-looking optimism, though, hinges on three events CFOs overwhelmingly support: more fiscal stimulus, a federal infrastructure spending package and a nationally coordinated Covid response — none of which is in place right now.” The national economic situation will become even more clear in the coming months as the next President of the United States will take office and we will see how this potential second wave is handled.