Anyone else remember early March like it was just yesterday? Our lives have been stuck in low gear for months. While my husband and I have certainly tried to make the best of a difficult situation, it’s likely our best memories of 2020 will be those from the beginning of the year. We had hoped we would be back to our “regular” lives again by now; instead, we’re watching things continue to get worse.
After nearly 10 months in recession territory and nine months since the rise of COVID-19 cases in the U.S. and shelter-in-place orders, you may be wondering how people are doing and whether or not your experience is the norm. Here are some of the trends I’m seeing in terms of how people are weathering the pandemic financially. I’ve found some of the data to be quite eye-opening and I’m guessing you will, too.
Millennials have experienced the greatest economic impact of the pandemic compared to other U.S. generations: While only 28% of U.S. adults say the pandemic has had a major impact on their finances and 45% say it’s had a minor impact, 39% of millennials say it has had a major impact on their finances and 41% say it has had a minor impact. Only 20% say it has had no impact. The results for Gen Z (35% major impact, 42% minor impact) are similar to the Millennials. Gen X (29% major impact, 44% minor impact) is right around average. However, Baby Boomers (17% major impact, 50% minor impact) seemed to have weathered the financial storm better than most.
The impact, both economic and health, has been especially severe for people of color: According to the Pew Research Center, Hispanic and Black Americans have been hit the hardest by COVID-19 related job and wage loss, and most don’t have rainy day funds to help cover three months of expenses in case of an emergency. The financial impact has been especially heavy for those on the intersections, particularly transgender people of color. According to the CDC, COVID-19 related cases and hospitalizations rates for people of color (including Latino, Hispanic, Black, African American, American Indian, and Alaska Native Americans) are at least twice the amount of the white population.
Parents with young children — particularly mothers — have been deeply impacted: Food insecurity has doubled for households with children, from roughly 14% in 2018 to 32% in July 2020. The numbers are even higher for Black and Hispanic households with children. Earlier in the pandemic, studies found that mothers (more than fathers) were cutting back on their work hours or taking leave from work. However, more recently, the Pew Research Center found that the pandemic decreased the share of both mothers and fathers at work in the US. While the decrease in fathers in the workforce was more pronounced for those with children under 3, the share of mothers in the workforce fell regardless of the age of the children. The share of mothers in the workforce was even less for Black, Hispanic, and Asian mothers.
Despite the many ill effects of the pandemic, the savings rate is up and many people are still spending less: According to the Federal Reserve Bank of St. Louis, the personal savings rate nearly tripled in April to a rate of nearly 34%. While the percentage has been slowly decreasing since April (it’s currently at 14.3%), that’s still almost double the savings rate of the start of the year in January (7.6%). While the rate of spending declined across the board at the beginning of the pandemic, low earners’ spending had returned to normal levels by May. However, for high or middle income earners, spending has continued to remain below average.
Surprisingly, giving has also increased this year. Giving was up 7.5% in the first half of 2020. Given the data on spending patterns, you may think that the wealthy were the main contributors to this rise. However, gifts of $250 or less accounted for much of this growth. Gifts of this amount were up 19.2%. Donors seemed to be moved to give even in the midst of the pandemic and economic uncertainty.