As states reopen, consumers are becoming less concerned about their financial situation. About 12.6% of Americans say they were worried about being able to make a minimum debt payment in May, down from a seven-year high in April (16.2%), according to a survey of consumer expectations released by the Federal Reserve.
The 12.6% figure is in line with percentages from December, prior to the pandemic that sent a shock wave through the economy. Consumers earning between $50,000 and $100,000 felt more relief in their finances in May as states began to reopen, according to the Fed survey. In that income bracket, the percentage of consumers who were worried about making the minimum debt payments dropped from 15.9% in April to 10.3% in May.
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For consumers who earn more than $100,000 annually, the percentage of those concerned about paying their bills dropped from 7.2% in April to 6.7% in May.
The largest concern in paying bills is for those who earn under $50,000 a year. In April, 22.9% worried about making their debt payments, compared to 18.7% in May.
Broken out by age, consumers over the age of 60 appear to be the least worried about their financial situation, while people under 40 are the most concerned.
On Tuesday, the National Bureau of Economic Research declared the nation is in a recession and has been in one since February. That marks the official end to the U.S.’s longest economic expansion in history that spanned more than 10-and-a-half years. More than 42 million Americans have filed for unemployment benefits since February.
However, several economists are optimistic that this recession will be short-lived and was ignited by shelter-in-place measures that left many unable to work during the COVID-19 outbreak.
Already, the U.S. Bureau of Labor Statistics announced late last week that the U.S. had added 2.5 million jobs in May—the largest monthly gain since the agency began tracking in 1939.
Also, total personal income actually grew during the pandemic lockdown due to the passage of a massive stimulus package that rushed aid to consumers affected by closures. Americans were able to save around 8% of their income prior to the pandemic but saved 33% of their income in May.
“With many economies advancing in phases of reopening, more money will be spent and more job additions will follow,” Lawrence Yun, chief economist for the National Association of REALTORS®, said in a statement last week following the jobs report.
As for the housing market, Yun is predicting a V-shaped recovery. However, “the broader economy will not be, and the double-digit unemployment rate will persist till the end of the year,” Yun says. “Still, the latest jobs data is showing much better recovery potential.” Source: “Americans’ Anxiety About Bills Dropped in May, Fed Survey Shows,” HousingWire (June 9, 2020) and Federal Reserve Bank of New York