Impact of COVID-19 to Household Incomes Diminishes and Gen Z Demonstrates the Most Financial Optimism

TransUnion’s Consumer Pulse study highlights the ongoing financial impact of COVID-19

As pandemic restrictions ease across the country, Canadians’ hope about their financial situation has increased slightly since the previous survey period, March 5-10, 2021. Less than a third of Canadian consumers say they expect their household income to be negatively impacted by COVID-19 in future. Accompanying this optimism, Canadians are also ready to increase their spending on activities such as shopping online or in-store, eating out, travel, and entertainment.

However, fraud attempts related to COVID-19 continue, with double the number of respondents reporting being targeted since the previous period. While all generations were targeted by multiple types of fraud, older generations saw the highest incidences of phishing attempts.

The most recent Consumer Pulse study includes a survey of 1,039 Canadian consumers conducted between June 2 and June 7, 2021.

While the financial impact of the pandemic is not over, Canadians are generally feeling positive about their financial situation,” said Matt Fabian, director of financial services research and consulting at TransUnion. “The younger generations in particular indicated they are hopeful and ready to increase their discretionary spending.”

Consumers confident in financial future, continue to pay down debt

Canadian consumers continue to demonstrate resiliency as the financial impact of COVID-19 gradually lessens. In the latest Consumer Pulse research, 35% of respondents indicated that their income is being negatively affected by the pandemic. In May of last year, that number was significantly higher, with 62% of respondents reporting a negative financial impact from the pandemic. The decrease in negative financial impacts of the pandemic has been accompanied by a decrease in balances as Canadian consumers continue to pay down debt.

Further, more than two thirds (70%) of respondents believe their income will not be impacted by COVID-19 in future. Similarly, 70% of respondents indicated positive feelings about their financial outlook, with 61% classifying their financial situation as either stable or hopeful. This confidence was relatively consistent across all generations and suggests that consumers are optimistic about an economic recovery.

Households that may have been more affected by the economic shock of the pandemic benefited from government subsidies and lender payment deferral programs to maintain a stable economic situation.

While TransUnion has observed growing confidence in consumers’ economic outlook, their confidence about paying bills did not change meaningfully, with 21% of respondents (+1%) not knowing how they would pay their bills and 37% of respondents saying they will likely only make partial payments on bills and loans. Additionally, 34% indicated they will borrow money from family or friends or withdraw from savings and investments to cover outstanding bills. Only 17% reported plans to open additional lines of credit to generate liquidity, with 7% saying they would open a new credit card account and 10% saying they would take out a personal loan.

Nearly half of all households (46%) continue to cut back on discretionary spending, though that percentage has decreased by 6% since the last survey. As lockdown restrictions ease and consumers return to previous spending habits, consumers said they are likely to increase their spending on shopping and dining out this summer.

Generations divided on importance and access to credit

In Q1 2021, TransUnion’s Industry Insights Report found that 29.8MM Canadian consumers have access to credit.

Overall, 53% of consumers say that they have sufficient access to credit, while 19% believe they do not. Younger generations are more likely to feel they lack access to credit, with only 32% of Gen Z respondents saying they have sufficient access. In contrast, 70% of Baby Boomers said they have enough access to credit and lending programs.

However, the pandemic may have reduced respondents’ belief in the importance of credit. Less than half (48%) of respondents believe access to credit is important to achieve their financial goals – down from 52% of respondents since this time last year. Once again, younger generations hold differing views from older generations, with 62% of Gen Z respondents considering credit important to achieving financial goals, compared to only 38% of Baby Boomers.

“Across many aspects of our financial data, we are seeing a clear generational divide about what matters for a consumer’s economic outlook,” explained Fabian. “Younger respondents recognize the importance of credit but don’t feel they have sufficient access. As the economy reopens, we expect younger generations to lead the way on spending in the Canadian market.”

Digital fraud activity increased noticeably

During the pandemic, there was an increase in fraud activity, with digital fraud attempts from Canada increasing 218%, as reported in TransUnion’s most recent global fraud study. The number of Canadian consumers who reported being targeted by or falling victim to a fraud scheme doubled in the most recent period from 3% to 6%, representing a significant rise.

Mirroring the broader fraud trend, cases of shipping fraud doubled to 15% since the prior period, while insurance fraud more than doubled from 4% to 10%. These were the fastest rising scams among reported fraud targets.

Younger generations tend to be targeted by shipping fraud, changing information via a call center, and fake insurance scams more frequently than older generations, who are more likely to be targeted by third-party seller scams and phishing attempts.

TransUnion’s COVID-19 support center provides helpful information for consumers who are concerned about their ability to pay bills and loans. The complete Consumer Pulse study can be viewed here.

About TransUnion (NYSE: TRU)

TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing a comprehensive picture of each person so they can be reliably and safely represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good.® TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people in more than 30 countries. Our customers in Canada comprise some of the nation’s largest banks and card issuers, and TransUnion is a major credit reporting, fraud, and analytics solutions provider across the finance, retail, telecommunications, utilities, government and insurance sectors.