What impact has COVID had on financial well being?
Impact of COVID on financial well being (CFFC)
- The Commission for Financial Capability recently published a survey of how the COVID crisis has impacted the personal & household finances of New Zealanders.
- The survey highlighted that while c. 26% of households were financially secure, around 34% were already experiencing financial difficulties. More than half of this group had already missed a payment (household bills or credit cards)
- Many of this group were already in some degree of trouble before the crisis hit. 38% of them were already unemployed & c. 1/3 were had some form of insecure employment as their main source of income.
NZ Economics+
Analysis and Comments
Similar surveys in the UK & Norway seem to show pretty much the same trend, although with lower percentages in potential difficulties (UK 28% & Norway 8%)
I am really interested in how the some of the bigger employment related demographic trends, such as the gig economy, zero hours contracts & income disparities, are impacting consumers abilities to continue to fund both big ticket & discretionary spend.
A recent chart from the St Louis Fed, FRED - US personal savings showed that, unsurprisingly, US personal savings has spiked. As of March 2020 it was up to 13.1%. Now to be fair, this is not even close to an all time high – back in the 1960’s & 1970’s it was steadily up above 10%, but more recently its been c. 3-6%.
During Q1-2020 conference Calls, many companies were cutting back on capex & investment to preserve cashflow.
I believe we are witnessing a typical state of the art Behavioral Finance
This is behavioral finance at its best in April:
- Personal Income in the US much higher than expected
- Personal Spending in the US lower than expected
Americans are SAVING ! Which is quite rare in the American Economic History.
As Shakespeare would say; "Crisis or no crisis, this is the question !"
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I actually love your analysis and the research you conducted from the information you got but on a contrary note it's actually a different scenario here in Africa. The rate of financial well-being here in Africa is really decreasing ever since the the government implemented the lock down order due to the coronavirus outbreak. Most workers really find it very difficult to survive if not for their monthly salary they do receive as workers. Most companies don't operate on regular basis and they are unable to import or export goods due to the closure of airports. It's not really that easy here, we are only surviving with the grace of God.
This really shows that the citizens are always in need of their money to take care of more expenses during this period unlike the previous years when there was no pandemic issues.
I just hope everything will surely get better one day with time. We just have to keep believing and we just have to keep staying safe to avoid contacting the virus.
Thanks for sharing this great post with love from @hardaeborla and I hope you have a great day ahead 💕💖❤️❤️💖💕💕💖
Intresting article as usual @vlemon
The COVID-19 has made a negative impact on the economic and financial field in every way.
Yes indeed... So many lay-offs already announced...
There are so many families in my country too who only depended on daily income but with the pandemic that means of livelihood has been cut off and it is really sad to see people eat in a way that isn't too cool.
The most unstable/ 'weakest' part of our population has been hit the hardest which is very difficult to watch for me...
@vlemon as per my opinions the average middle class has been most effected , the rich don't get effected and the poor who don't have nothing to lose.
Unfortunately, I still think the poors are the most affected as they either work as blue collars (no job / no pay) or in little jobs off the books. So confinement = no job = no income.