The Covid-19 pandemic and resulting shutdown measures have resulted in a deep recession for the global economy. Despite this, we found the majority of Americans are either very or somewhat confident about their finances for the rest of 2020, according to a new survey conducted by The Simple Dollar.
That confidence doesn’t mean precautions aren’t being taken. Many of Americans said they have cut back on nonessential shopping (64%) and delayed major purchases (53%). Aside from nonessential shopping, dining out, home improvement projects, car purchases and transportation expenses are among the popular reductions. Consumers are opting to save when possible in the face of a recession, even if their personal finances and income are steady.
Survey results
- 72% of Americans are confident they can cover essential expenses for 2020.
- 62% still have one at least major financial concern between groceries, utilities, rent, insurance and employment.
- Nonessential shopping, eating out and transportation are the most popular spending categories that Americans with financial concerns are cutting back on.
- 53% of those with financial concerns have postponed a major purchase because of Covid-19 financial concerns.
- 49% of those with financial concerns have postponed home improvement projects, and 33% have postponed car purchases.
72% of Americans are “very” or “somewhat” confident
Despite the significant economic impact of the pandemic, the majority of Americans feel confident they can cover essential expenses for the rest of the year. Three in ten Americans indicated they were very confident, and 42% were somewhat confident. For others, their financial future is less secure — 15% said they are not very confident about covering essential expenses, 7% not at all confident and 6% were unsure.
[Read more: When Will the Economy Recover From Coronavirus?]
But 62% have at least one major source of anxiety
Though many feel confident about covering immediate expenses, Americans are not without financial stress. Of those surveyed, 38% said they don’t have any financial concerns during the Covid-19 outbreak. The 62% who indicated financial concerns chose the most pressing — paying for groceries, utilities, mortgage/rent, insurance and general expenses.
[Read more: Does Your Credit Card Cover Coronavirus Cancellations?]
90% of Americans have reduced spending
Only 10% of those with financial concerns have not cut back on spending in some way. People are mainly reducing their spending on nonessential shopping, eating out and transportation costs. A lot of this could be circumstantial as most retail stores and restaurants have been closed. The cost of living and factors like rent and car payments have changed since the pandemic too. As places of employment close or shift to remote work, transportation and commuting costs are naturally declining.
[Read more: Coronavirus and Your Car Insurance: A Practical Guide]
About half of those with financial concerns have postponed a major purchase
Just over half of those with financial concerns (53%) said they have delayed a major purchase due to the current financial climate. Keep in mind, not every person surveyed necessarily had an upcoming purchase to delay. Of the 47% who did not postpone a major purchase, a portion of those people decided to purchase anyway, and some didn’t have any upcoming major purchases.
72% who have delayed a major purchase, postponed home improvement projects and/or buying a car
Of the major purchases postponed due to Covid-19 financial concerns, 49% were home improvement projects, and 33% were car purchases.
While smaller DIY projects have flourished under quarantine, and hardware stores have seen steady foot traffic, larger renovation projects have mostly been paused. Home renovation projects vary widely in cost depending on the task and scope but generally aren’t considered an essential spend. Social distancing recommendations are likely influencing that extra foot traffic in homes too.
“It’s not surprising that Americans are pulling back on their non-essential spending. With the uncertainty that Covid-19 brings, many families are reevaluating their budgets and cutting superfluous spending habits as a result of this unknown. Thus, saving more money than before the pandemic hit,” said Courtney Milhocik, financial editor for The Simple Dollar.
Too long, didn’t read?
Our survey found most Americans are pretty confident they can handle their essential expenses for the rest of 2020. Nonessential expenses and spending, however, are being significantly reduced. Most people are saving money as the economy enters a pandemic-related recession.
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Survey methodology
The Simple Dollar commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1179 adults. Fieldwork was undertaken between May 18-19, 2020. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+).
We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.
