Consumer Debt Drops During The COVID-19 Pandemic
There is no doubt that COVID-19 has been reshaping consumer spending habits since the start of the pandemic. It was expected that there would be a sharp rise in credit card debt when unemployment numbers soared. To the contrary, the opposite happened.A recent report by the Federal Reserve showed a staggering $82 billion decline in credit card balances. Spending habits for unemployed Americans in general have become more focused on purchasing essential items and not racking up credit card debt. While the decrease in discretionary spending means less money is flowing back into the economy, Americans are overall improving their credit score.
The nearly $3 trillion in government aid, including unemployment benefits, direct payments and payroll loans have all helped absorb the devastating impacts of the fastest economic downturn in American history.
Americans who are fortunate to still be working have shifted their spending habits towards paying off credit card debt, building their savings and using surplus dollars for home renovations and backyard projects. In many ways, Americans are paying attention to their personal finances and situations.
Now more than ever, it is important to be prepared and have a plan for the future. It has been stated, "The best way to predict the future is to create it." Our team remains committed to serving your needs and working together to create “strategies for your success.”
We encourage you to Contact Us if you or someone you know has been affected by a job loss or have other financial planning needs.