Pandemic affected two-thirds of consumer income

A recent survey showed that two-thirds of consumers said their income was negatively affected by the pandemic in the second quarter of 2021, with the impact more pronounced for Gen X and millennials.

Information and insights company TransUnion conducted a Consumer Pulse study from June 1 to 16, covering 1,100 respondents. It showed 66% of respondents reporting their household income decreased in the second quarter.

The study also showed the impact was more prominent in middle-aged consumers with 69% of Gen X (born 1965 to 1979) and 68% of millennials (1980 to 1994) affected.

The outlook remains uncertain with 54% of respondents expecting their household income to be affected in the future, up five percentage points from the previous quarter.

A majority or 85% remain concerned about payment of bills and loans and nearly half or 49% expect they would be unable to pay at least one of their current bills and loans in full.

To pay for current bills or loans, 43% of consumers plan to use money from savings. For millennials, those who will use savings to pay for bills or loans is at 47%, while the figure is at 42% for Gen X.

The study showed middle generations are still in need of credit as 52% of Gen X and 50% of millennials said they intend to apply for new credit or refinance existing credit within the next year.

Despite this, many respondents still hope their finances will improve. The study showed 74% of respondents are optimistic on their finances, 61% consider their financial situation hopeful or they think their finances will recover even if their household income has decreased.

Meanwhile, eight percent said their financial situation was either stable or thriving, and five percent said they were resilient as their household income has decreased during the pandemic, but their finances have fully recovered.

Over the next three months, local consumers plan to increase or at least maintain the current household spending.

The study showed 72% would increase or at least retain their spending on digital services and 61% on retail such as clothing and electronics.

It showed 77% plan to increase or keep spending on medical care, 74% would do the same for bills and loans, and 62% on retirement funds or investments.

The study found that 86% believe access to credit is moderately important to achieve their financial goals, but only 32% have sufficient access to credit.

Majority or 77% of all respondents are of the view, monitoring credit is very important with 68% keeping track of their credit at least per month.

More than half of respondents or 57% expect their number of online transactions to increase over the next three months.

The study showed 42% were targeted by a digital fraud scheme but did not become a victim, but six percent acted on the scheme and became a victim.

Among the common COVID-19 related digital fraud schemes consumers experienced were phishing (40%), third-party seller scams on legitimate retail websites (29%), and shipping fraud (24%).