Impact of COVID-19 on Consumers and Financial Marketplace Insights
Explore key findings on consumer spending, credit inquiries, delinquencies, and forbearance measures amidst the COVID-19 pandemic. Learn about the economic impact, trends in consumer behavior, and the financial market landscape. Stay informed on the challenges and opportunities in the current financial environment.
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Presentation Transcript
The Impact of the COVID-19 Pandemic on Consumers and the Financial Marketplace Consumer Advisory Board Meeting | September 2020
Key Findings Consumer Spending and Credit Inquiries Consumer Delinquencies Uptake of forbearance measures Originations activity in selected markets 2
Key Findings Unemployment is high and is likely to remain so for a long time We have not yet seen widespread defaults across several markets There have been significant assistance and forbearance programs across many markets, but some of these programs are ending The fiscal support that has supported many consumers so far has ended, so the next several months may look very different We continue to monitor data and markets to see how consumers manage through the pandemic in the coming months 3
Spending fell in March but has recovered, especially for low income consumers Source: Chetty, Friedman, Hendren, Stepner, and the Opportunities Insight Team (2020) 4
Credit applications dropped at the pandemics start, but have recovered in some markets Percent change in credit inquiries relative to the first week of March 2020 Week 17 is June 20-26 Source: Update from Office of Research Special Issue Brief The Early Effects of the COVID- 19 Pandemic on Credit Applications 5
No evidence of increasing delinquencies SHARE OF OPEN ACCOUNTS THAT TRANSITION FROM CURRENT TO DELINQUENT, BY MONTH, CREDIT SCORE GROUP AND ACCOUNT TYPE Source: Update from Office of Research Special Issue Brief The Early Effects of the COVID-19 Pandemic on Credit Applications 6
Forbearance levels have stabilized for now 7.4% of mortgages (3.9 million) are in active forbearance, as of Aug 25. Forbearance levels have stabilized, but reaction to expiring unemployment benefits remains to be seen. 7
Student Loans: What to Expect When CARES Act Relief Expires President-ordered, limited post- CARES assistance: But, as of yet, no extra help for: >1.5 million borrowers who recently left school and will enter repayment at end of 2020 0% interest extended 3 months for federally-owned loans 9 million borrowers who face challenge of recertifying IDR enrollment within a 6-month time frame when suspension does end 25 - 30 million borrowers can delay payments through December 8 million borrowers do not face restart of involuntary collection of defaulted federal loans until 2020 $0 payments can still be counted toward PSLF and IDR payment clocks 8
Auto Originations Auto Originations: Accounts Number of Accounts in Thousands; NSA, Average FICO Auto Score 8 Source: Equifax Market Pulse, September 1, 2020 10
Current state of credit card activities Balance decline decelerating Spending recovering Credit card balances %13 %11 Balance level contracted but seems to be leveling off, at least for now Card spending on the rise but not fully recovered yet Other measures such as new accounts, account closures indicated less demand and supply Source: Equifax credit trends weekly report and Opportunity Insights 11
