Household incomes continue to recover from the pandemic,
CHICAGO, Aug.25, 2021 (GLOBE NEWSWIRE) – The percentage of consumers who said their household income is negatively affected by COVID-19 continued to decline, reaching 30% in early August. The latest Consumer Pulse study from TransUnion (NYSE: TRU) found that despite improving incomes, unknowns about new COVID-19 variants are causing changes in consumer spending. In particular, the Millennial generation faces the greatest challenges.
The latest Consumer Pulse study includes a survey of 3,085 U.S. consumers from August 3-9, 2021.
The percentage of consumers who report their income is currently negatively affected by the pandemic has fallen to 30%, from 38% in the first quarter of 2021 and 32% in the second quarter of 2021. However, perhaps due to the increase of cases of COVID-19, households that expect or not if their income will decrease due to the pandemic in the future, they have fallen from 50% to 56% in the second quarter.
“It is a positive sign to see the continued improvement in household incomes, although it is evident that the solid recovery observed in recent quarters slowed down at the end of the summer. This is likely due to the recent increase in COVID-19 cases as new variants are impacting parts of the country, ”said Charlie Wise, head of global research and advice at TransUnion. “We have seen an increase in household income and an expansion of the credit market throughout 2021, both positive signs for the economy. Therefore, it will be important to monitor in the short term whether the increase in COVID-19 cases is a short-term incident or if they continue to grow for a longer period. “
Interest in building emergency funds and online credit research is growing
The recent increase in COVID-19 cases has also affected consumer spending behaviors, with more and more people turning to the internet. Of the 30% who say they will increase their online shopping in the next three months, 78% say it’s because of the recent spike in COVID-19 cases.
Americans are also working to make sure they have access to money and credit. A greater proportion of consumers, 21% from the second quarter, say they are saving more in an emergency fund. Of all generations, millennials and millennials are the top two groups who think it’s important to have access to credit to meet their financial goals, with about half of them considering applying for credit or getting credit. refinance a loan over the next year (Millennials at 54%; Gen Z at 43%).
About a third of consumers who report being in the risk category close to primary risk (credit scores between 601 and 660) and 27% of those who identify themselves as high risk consumers (credit score range 300 to 600) also plan to apply for new credit or refinance the credit during the following year. Of all the credit score ranges, those who report being blue chip (721-780) said they were the most likely to apply for new credit or refinance existing credit in the next year at 44%.
“The good news is that six in ten survey respondents said they check their credit at least once a month. This is consistent with 65% of Americans who say it’s very or extremely important to monitor their credit, ”said Margaret Poe, head of consumer credit education at TransUnion. “It is extremely helpful for an individual to understand where they stand from a credit health standpoint and how they can potentially improve their situation. “
Millennials continue to face the biggest challenges
In 17 of 18 TransUnion Consumer Pulse studies since March 2020, Millennials reported the largest negative impact on household income. In early August, nearly half (46%) said their household income was currently declining due to the pandemic. Millennials were the only generation to see this percentage increase from Q2 2021.
Millennials struggle to pay their bills, with 42% reporting missing a loan or bill payment in the past three months, the highest percentage of any generation. Seeking help, 25% say they rely “a lot” on government financial support to get through the pandemic – nearly twice Gen Z (13%), more than twice Gen X (10%) and more four times the baby boomers (6%).
“It can be disheartening to see your credit rating drop after a financial setback. But with a plan, good financial habits, and a dose of patience, you can rebuild your credit. By improving your overall financial situation, your credit will follow over time, ”concluded Poe.
TransUnion COVID-19 Support Center provides useful information for consumers who are concerned about their ability to pay their bills and loans. Those interested in learning how to read their credit report can click here. The full Consumer Pulse study can be viewed here.
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