CFPB Report Details Changes in Consumer Financial Status During Early Months of Pandemic
A new report in the Consumer Financial Protection Bureau’s (CFPB) Making Ends Meet survey series presents results from the Bureau’s study of COVID-19’s early impact on consumers’ financial well-being. The analysis found that fewer consumers had trouble paying a bill at the onset of the pandemic than in 2019, and credit scores increased across demographics such as race, gender, rural status, and income.
“An overall improvement in financial status does not imply more general improvement in consumers’ lives, especially against the tragedy of so much illness and death,” the report reads. “Because consumers were unable or unwilling to spend money on things they enjoy, the improvement may have come at the cost of these lost opportunities.”
The results suggest that public and private interventions like loan forbearance and extended unemployment benefits helped buffer consumer finances at the start of the pandemic. The CFPB’s financial well-being score reported an average credit score of 699 in June 2019, which rose to 710 by June 2020.
Despite the average increases, many consumers’ financial status declined. Consumers whose income or savings decreased were more likely to experience lower credit scores and reduced financial well-being. Forbearance seems to have helped consumers who were having a hard time paying bills.
The report found that in June 2019 and June 2020, Black and Hispanic consumers, women, and consumers with less than a $40,000 household income were more likely to experience financial difficulty. Within the year, most groups saw a drop in the frequency of experiencing a difficulty.
The report also found that while many consumers’ financial well-being improved, the gains were not likely to be permanent. Unemployment remains higher than prior to COVID-19, and the weekly $600 unemployment benefits provided by the CARES Act expired last July, which likely caused more financial distress.
Click here to view the full report.