A monthly survey asking consumers about their financial vulnerability showed things took a sharp turn for the worse in January. As the chart below shows, 29% of 2,200 U.S. adults polled by Morning Consult Jan. 11-12 said they didn’t have enough savings to cover a month’s worth of basic expenses, an increase from 22.3% of those polled in December. That many people haven’t felt so financially vulnerable since the question was first asked in May 2020, shortly after the COVID-19 outbreak locked down much of the economy. The deterioration is probably a sign of not only relentlessly rising costs, but income lost because of the latest pandemic spike, the Morning Consult pollsters said. COVID-19 cases surged again in mid-December, and at one point 8.75 million people weren’t working because they were sick or had to care for someone with COVID-19 symptoms, Census Bureau polling showed. What’s more, the federal government is no longer paying out extra benefits for those claiming unemployment insurance, like it was during previous periods of higher income loss, pollsters said. “Over the past six weeks, rising prices combined with elevated income losses forced Americans to draw down their savings faster than they were able to reduce their basic monthly expenses,” economists at Morning Consult wrote in a report last week. Plus, unlike earlier in the pandemic, “fewer laid-off adults are receiving benefit checks and the checks themselves are smaller." If people’s financial situation continues to deteriorate, consumer delinquencies and defaults may rise throughout 2022, the economists wrote. Have a question, comment, or story to share? You can reach Medora at medoralee@thebalance.com.
