Lost Income & The Anticipation of More Loss
American households are experiencing severe levels of financial distress as pandemic continues - and the extent of it worsens according to level of income, race and age
a Trendency Research/COVID-19 Data Project feature
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On Average, Americans are reporting income lossed of 20 percent since February 1st. After losing on average a reported 20 percent of income, Americans are still anticipating greater losses.
These are averages. And, as we know, the economic hit has not been even across the board.
Across income levels, it is clear that individuals with higher annual income are experiencing and anticipating less loss.
A trend we see across the board is that Americans who had not previously experienced losses are anticipating them now. Even in the highest income group, 15 percent of Americans who were not previously experiencing losses are anticipating them in the future.
These numbers will become important for what spending patterns will look like once the economy starts to open-up again. Lower income households have no (or very little) disposable income, so what they are spending money on tends to be predetermined. Higher income households have more decisions of what to spend money on and what not to. If the anticipation is a loss of income, the amount of additional spending is likely to be less until that negative viewpoint turns more positive.
Across racial groups, its clear that White Americans are experiencing and anticipating less economic loss than Americans of Color.
Specifically, Hispanic Americans are anticipating the greatest economic loss (75-100 percent of income) being twice that of White and African Americans.
Additionally, only 28 percent of Hispanic Americans are anticipating no income loss moving forward. Compared to 36 percent and 44 percent of African Americans and Whites, respectively.
Across racial groups, it is clear from the larger increase (24 percent) in lost income to anticipated lost income that White and Hispanic Americans have a much more pessimistic view of the economic future. These two groups however are coming at it from different angles, with White Americans having experienced less economic loss so far while Hispanic Americans are reporting the highest levels so far.
African Americans on the other hand seem to be feeling closer to the bottom than the other two cohorts, although not all the way there.
Across age groups, it’s clear that older Americans are experiencing and anticipating less loss.
Nearly 3 in 4 Americans older than 65 years have reportedly lost no income, and 67 percent anticipate losing no income. Given the employment status of most in this cohort, this is not surprising.
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Younger Americans have already taken the hardest hit and are expecting more to come their way.
As we saw on the previous slide, the anticipation of lost income is highest among middle aged Americans when compared to what they have already lost. This cohort has not felt the immediate impacts from the economic shut down at the same levels as younger Americans, but they’re economic expectations are very negative.
While older Americans have greater health concerns around COVID-19, their economic concerns are much less.
From March 20th until April 8th there has been no overall shift in views on the loss of income of the anticipation. This is not to say there has been no day-to-day movement.
The President’s declaration that the economy would be over by Easter had a clear effect on the numbers, but that mood was short lived. Since the beginning of April the economic view has been on a slightly more positive trajectory and it will certainly be interesting to see where these numbers go over time.
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