Positive Signs Abound Even as Many Household Incomes Still Negatively Impacted by COVID-19
March 16 2021 - 8:00AM
U.S. consumers continue to be negatively impacted one year since
the onset of COVID-19, though positive signs were observed in
TransUnion’s (NYSE: TRU) newest Consumer Pulse study. The
percentage of consumers who said their household income remains
negatively impacted by the pandemic stands at 38% – significantly
down from 53% one year ago in March 2020.
Formerly named the TransUnion Financial Hardship study, the
Consumer Pulse study includes a survey of 2,995 U.S. consumers
conducted between February 26 and March 1, 2021. As the impact on
household income lessens, early indicators point to the COVID-19
vaccine having a positive effect on consumers’ outlook. Of those
persons who said they had been fully vaccinated, 77% stated
they are optimistic about the future compared to just 59%
of those who had not been vaccinated.
“Over the last 12 months, TransUnion has maintained a monthly
study of the economic hardship experienced by millions of consumers
impacted by COVID-19 around the world,” said Chris Cartwright, CEO
of TransUnion. “The insights from this rich data set provide an
invaluable global barometer of the pandemic’s financial
impact.”
Pandemic Affecting “Consumer Types”
Differently
One year since the pandemic, the Consumer Pulse study exhibited
that three primary U.S. consumer types have formed as a result of
COVID-19:
- Stable (35% of the population) – those
consumers whose income has not decreased, and finances are as
planned;
- Hopeful (27% of the population) – consumers
with income that has decreased, but believe their finances will
recover;
- In Limbo (22% of the population) – people with
income that has decreased, but say they are unsure or slightly
doubtful their finances will recover.
The remaining U.S. consumer types include those persons who are
resilient, thriving, devastated or financially hit. Resilient
consumers, who make up 8% of the population, saw their income
decrease, but say their finances have fully recovered. Thriving
consumers (5% of the population) had no income drop and better than
planned finances. Devastated consumers (2%) had decreased income
and don't think they'll ever recover. Financially hit people (1%)
include those whose household income has not been impacted, but say
finances are worse than planned.
The study focused on the in limbo group since its participation
in the financial recovery may play an outsized role. Comparing them
to the total population, 62% of in limbo individuals cut back on
discretionary spending vs 45% overall and 38% cancelled
subscriptions/memberships vs 24% overall. The uncertain future of
those in limbo is leading them to curb future spending as 54%
expect to decrease discretionary spending vs 37% overall.
Though the in limbo group may be struggling, the report
highlighted that many consumers may soon release pent-up demand for
spending that was curbed during the pandemic. More than half (53%)
of resilient consumers and nearly one-third of thriving (27%) and
hopeful (29%) consumers expect to increase discretionary
spending.
“Whether you are in limbo, hopeful, or stable, the expectation
is that many consumers will soon be flexing their spending muscle,”
said Charlie Wise, head of global research and consulting at
TransUnion. “In addition to more people receiving vaccinations,
consumers have been or soon will be buoyed by an improved
employment picture, stimulus checks, income tax returns and more
access to credit.”
Resources for Struggling Consumers
Despite the positives observed in the report, some consumers
continue to struggle. Concern about the ability to pay bills and
loans among consumers who state their income is currently down (38%
of the population) has remained consistently high (73% in March
2020 and 74% presently). Government assistance continues to be
important to impacted consumers – nearly four in 10 (39%) middle-
and low-income consumers plan to use stimulus checks to pay their
current bills or loans.
More consumers whose income is currently down are turning to
borrowing cash (25% vs 17% in April 2020), taking out personal
loans (16% vs 9% in April 2020) or opening
new credit cards (15% vs 8% in April 2020) to
cover their daily expenses.
“A benefit to consumers is that lenders are incorporating
alternative data into their lending strategies. Leveraging such
information can result in more trustworthy relationships between
consumers and lenders, which is especially important when
uncertainty has reigned over the credit landscape during much of
the last year,” 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.
About TransUnion (NYSE: TRU)TransUnion is a
global information and insights company that makes trust possible
in the modern economy. We do this by providing a comprehensive
picture of each person so they can be reliably and safely
represented in the marketplace. As a result, businesses and
consumers can transact with confidence and achieve great things. We
call this Information for Good.®
A leading presence in more than 30 countries across five
continents, TransUnion provides solutions that help create economic
opportunity, great experiences, and personal empowerment for
hundreds of millions of people.
http://www.transunion.com/business
Contact |
Dave
BlumbergTransUnion |
E-mail |
david.blumberg@transunion.com |
Telephone |
312-972-6646 |
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