New data indicates COVID-19 financial impact on Canadians turning a corner
Mindset shifts from panic to preparedness; structuring debt repayments to manage cash flow
TransUnion’s latest weekly study looking at the impact of COVID-19 on consumer finances in Canada, reveals consumers’ shifting mindset from panic to preparedness. The survey of 1,078 adults conducted on May 28th and 29th, 2020, reveals that consumers are adjusting to a new normal around their budgeting, and that government support and bank forbearance programs continue to provide financial relief.
Consumer mindset shifting from panic to preparedness
The proportion of consu mers saying they are negatively affected by COVID-19 has dropped to 55.1% (down from 58% the week prior and 57% in Week #1 over two months ago) representing the lowest rate since the survey started at the end of March. The percentage of Canadians who expect their household income to be negatively impacted is also the lowest since the inception of the survey at 15%, compared to 19% the week prior and 24% in Week #1.
Canadians changing money patterns to better manage cash flow
The data shows that the impact of the crisis is fundamentally shifting household budgets. Canadians who indicated they have been negatively impacted are using unemployment benefits or other government subsidies, as well as paying less down against existing debt to preserve cash flow. Specifically, more than 1 in 3 affected consumers (35%) indicated a preference paying only the partial amount of bills they can afford. Canadians are dipping into investment and retirement funds at an increased rate, with 31% of those impacted using money from TFSA or RRSP accounts (compared to 22% the week prior and only 10% in Week #1). Negatively impacted consumers also indicate cutting back on savings and investments. Canadians indicating that they are not impacted are making more modest decisions like cutting back on discretionary spending.
Ongoing concern about paying bills
Two-thirds (67%) of consumers impacted remain concerned about their ability to pay bills and loans, slightly down over the past two months from 70%. Though that number remains relatively steady, the length of time consumers feel they are able to maintain bill payments fell. While 43% of consumers impacted felt they could maintain payments for another 1-3 months (compared to 49% the week prior), those able to maintain bill payments for less than 2 weeks increased from 9% the week prior to 13%. While credit card payments remain the bill most consumers say they won’t be able to pay (46%), the overall proportion dropped from 48% the previous week.
Gen Z feeling the brunt of the impact
Gen Z are now struggling the most as the proportion indicating they are negatively impacted grew to 69% - the only generational cohort to increase in the past month. In comparison, 64% of Millennials and 59% of Gen X report being negatively impacted. This may be due to a combination of newer entrants into the workforce and students with less savings and liquidity to fall back on.
Details about the research and additional resources for consumers can be found on TransUnion’s COVID-19 website.
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Contact Fiona Bang