Survey Finds Majority of Americans are Struggling to Reduce Debt Amid Coronavirus Crisis
If it weren’t already clear that the COVID-19 pandemic was hitting Americans in their pocketbooks, the latest edition of a financial literacy poll once again highlights some of the struggles consumers are having. The survey (conducted by Harris Poll) asked 2,000 U.S. adults about their current financial situation and what factors were impacting them. Headlining the survey was the fact that 55% of respondents say they’re having a difficult time reducing their debt due to various factors.
At the top of the list, 22% said their inability to pay down debt is due to a reduction in income. For comparison, 19% said the same when a similar poll was conducted in March of this year while 17% gave this answer in a March 2019 survey. Other common responses for why they were unable to tackle their debt at this time include unexpected financial emergencies (18%), job loss (13%), or lack of room in their budget (13%).
On the other hand, 47% of those surveyed said they were very or extremely confident about their ability to meet financial obligations going forward. This includes 21% who described themselves as “extremely confident.” That 47% figure is up slightly from the 46% who said the same in the previous March 2020 poll.
As for other financial worries, the top concern among respondents was not having enough money in an emergency fund — something that 13% of those surveyed ranked as their number one concern. Interestingly, the percentage of those who stated that their biggest issue was not having enough money in retirement fell to its lowest level since this survey began in 2014. Although 17% named this their top money worry in March 2019 and 13% did the same two months ago, only 8% said as much this time around.
Offering insight on this latest survey, National Foundation for Credit Counseling (NFCC) president CEO and Rebecca Steele said, “The challenges related to debt reduction are amplified for those who have lost their jobs as a result of the pandemic. Insufficient levels of emergency savings coupled with prolonged periods of unemployment make it more essential for the expansion of long-term debt management solutions provided by nonprofit credit counseling agencies.” Looking at the larger picture, Karl Dahlgren of the non-profit BAI noted, “As a result of a focus on accessibility to capital and reduced spending, we are seeing strong deposit growth from both consumer and small business accounts for financial services organizations since the beginning of shelter-at-home orders in March. However, he went on to warn, “Leaders should be aware, though, that the circumstances that spurred this growth – such as delayed tax filing and decreased consumer spending – will end later this year, possibly prompting a moderate downturn in deposit growth.”
It should be noted that, although things may seem bleak now, this latest survey does show some optimism when it comes to recovery. In that aspect, perhaps Wall Street and Main Street aren’t too far apart from each other. Nevertheless, as Dahlgren points out, the need for financial aid has not subsided even as some states begin easing lockdown restrictions. So, while we will certainly get through this, there may be more monetary challenges ahead in the short term.