The coronavirus pandemic has taken a major swipe at the backbone of the economy: consumer confidence. Consumer spending is a major driving force of the economy, and healthy spending can vary significantly based on a number of factors.
Employment is one of those factors -- and unemployment levels have soared since the pandemic hit. According to the Labor Department, the U.S. unemployment rate is at 20.6%, and 26.5 million of Americans have filed for unemployment in the past five weeks.
We used Feedback Loop's rapid consumer feedback platform to survey more than 350 U.S. adults who were recently laid off or furloughed to understand their levels of concern around the state of the economy, how they feel about their personal finances, and where they plan to spend.
Some key findings:
- An overwhelming majority of participants (79%) said they were concerned or extremely concerned about the state of the U.S. economy. The older generation (65+) was more likely to indicate high levels of concern, with 80% describing themselves as extremely concerned. And concern about COVID-19 translates to more economic worry: 71% of participants who are extremely concerned about the virus also expressed being extremely concerned about the economy, compared to 33% who were not at all concerned about the virus or the economy.
- The most common actions taken in response to COVID-19 indicate that people are looking for ways to stay financially afloat, doing things such as filing for unemployment (38%), searching for a new job (35%), borrowing money from friends or family (21%), or selling personal belongings (20%). Respondents with children were more likely to indicate that they have borrowed money from friends or family (30%) or applied for a loan (19%). Only 18% and 17%, respectively, have contacted their mortgage lender or landlord to adjust their monthly payments, but those in urban areas were more likely to have contacted their mortgage lender (29%) or landlord (24%) to delay or reduce payments, which can likely be attributed to the higher cost of living.
- Spending has taken a hit as a result of the pandemic, too. When participants were asked what actions, if any, they’re taking to limit or reduce spending, a slight majority (55%) said they’re taking significant action. Levels of concern around the virus doesn’t appear to correlate to levels of concern around personal finances: 66% of participants who indicated they were “extremely concerned” about coronavirus said they were taking steps to limit or reduce spending, while a majority of participants who indicated they were “not at all concerned” about coronavirus said they, too, were controlling their spending during this time.
- The most common areas where participants are limiting or reducing their spending include ordering delivery or takeout (68%), purchasing discretionary or non-essential items such as clothing, shoes, or accessories (66%), future travel or trips (56%), and beauty and personal care items (53%). Areas where consumer spending is healthier include, somewhat obviously, groceries, alcohol, investing, and streaming services. Despite steep discounts being offered in retail and travel, it may take a while before demand meets supply and consumer spending strengthens in those industries.
- The record number of unemployment claims has led to jammed phone lines, crashing websites, and delayed payments, forcing many to dip into their savings during this time. Men (25%) were more likely than women (12%) to indicate they’re confident that their savings or other income sources will allow them to meet their basic financial needs while laid off or furloughed. Likewise, those with household incomes over $100,000 were more likely (32%) to be confident in their ability to weather this financially than those in other income brackets: $50k-100k (17%); $25k-$50k (11%); under $25k (12%).
Want more information on Feedback Loop's COVID-19 research? Email Mark Pivinski at mark.pivinski@feedbackloop.com.