Impact of COVID-19 to Household Incomes Reaches Pandemic Low with Recent Graduates Demonstrating the Most Optimism
TransUnion’s Consumer Pulse study explores the pandemic’s continued financial impact
The percentage of U.S. consumers who said their household income continues to be negatively impacted by COVID-19 dropped to 32% at the beginning of June. This is down from 38% three months ago and is the lowest level since TransUnion (NYSE: TRU) began tracking this metric via its Consumer Pulse study in March 2020.
The most recent Consumer Pulse study includes a survey of 3,027 U.S. consumers conducted between May 24 and June 1, 2021. It found that recent graduates are exhibiting the most optimism for their future prospects. Approximately 83% of 2020 and 2021 high school and college graduates stated they are optimistic about the future. This compared to 64% for the overall population.
Recent graduates also are far more likely to seek out new credit. Over half (54%) said the pandemic made them more open to using credit in the future – nearly twice the overall population (28%). And 86% of those recent grads with career-track jobs say they plan to apply for credit or refinance in the coming year.
“While some consumers continue to be negatively impacted by the pandemic, we are encouraged to see improvements in the level of optimism, particularly from the youngest generations,” said Charlie Wise, head of global research and consulting at TransUnion. “Recent graduates are clearly more optimistic about their future prospects and appear to be more inclined to spend, helping to invigorate the economy.”
Optimism Also Heightened for Vaccinated Population and Families
While three in four people (76%) who started a new job or revenue generating activity are optimistic – compared to 64% of the overall population – the study found that vaccinations also are playing a role in the level of optimism.
Two-thirds (67%) of consumers who are fully vaccinated said they are optimistic and 71% of those who plan to get fully vaccinated are optimistic. Only about half (52%) of those who don’t plan to get fully vaccinated are optimistic.
Those respondents who said they intend to get fully vaccinated, but are not yet, are also most likely to increase spending. More than one-third (34%) of these respondents said they expect to increase their retail spend vs. 24% of the overall population.
Households with children also are more optimistic about the future than those without even though they face greater income challenges. About 43% of families with children report having their income reduced compared to 26% of those who do not have children. Despite this, nearly three-quarters (73%) of families with children are optimistic about the future compared to 58% without children.
Not Out of the Woods Yet, But Younger Generations May Spur Economy On
Of all U.S. consumers, 21% are not sure if their finances will recover from being reduced during the pandemic. A large number of consumers in this group of respondents are women identifying in lower income brackets with hourly wage jobs. About one in four people (25%) report being hopeful their finances will recover. Hopeful consumers tend to be younger Hispanics families.
Consumers are still being cautious as the economy opens up. More consumers plan to decrease discretionary spending and large purchases than increase in the next three months. But the situation is improving with 17% fewer consumers saying they’ll cut back compared to the results of the same survey during the first quarter of 2021. And spending trends are much different for the youngest generations.
Gen Z and Millennials said they will increase expenditures across nearly all categories, especially discretionary spending. Thirty-five percent more of Gen Z and 48% more of Millennials said they will increase discretionary spending compared to the overall population.
“As we enter the summer months it will be particularly interesting to observe the spending patterns of the youngest generations. The pandemic likely impacted this group’s social lives the most and as more of the country opens up and things begin to normalize, we anticipate that the 20- and 30-somethings will be leading the way in spending,” concluded Wise.
Consumers still feeling the impacts of COVID-19 and seeking advice to help manage pandemic-related financial hardship can view segments of the “The Game Plan” at www.cnn.com/thegameplan. The five-part video series is produced by TransUnion, American Express, VantageScore® and Courageous Studios. Segments discuss topics like debt management and saving for retirement, managing finances in times of crisis and investing in the future.
TransUnion’s COVID-19 support center also provides helpful information for consumers who are concerned about their ability to pay bills and loans. The complete Consumer Pulse study can be viewed here.
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