COVID-19

Household debt up 4% in the first quarter

Justin Ho Jun 12, 2020
Heard on: Marketplace Morning Report
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David McNew/Getty Images
COVID-19

Household debt up 4% in the first quarter

Justin Ho Jun 12, 2020
David McNew/Getty Images
HTML EMBED:
COPY

A new report from the Federal Reserve this week says debt held by households increased by almost 4% in the first quarter. Much of that increase happened before the pandemic started. But what does that say about where we are headed now?

Some people are digging deeper into debt during the pandemic. Greg McBride at Bankrate.com said about 1 in 6 households reports having more debt now than before the crisis.

“And that’s 1 in 4 for those that have suffered some sort of income disruption,” McBride said.

A separate report from the New York Fed says the average debt per capita rose to $52,000 in the first quarter, about 3% more than the year before.

But economist Tim Quinlan at Wells Fargo said the government’s stimulus has caused many people’s incomes to rise, too.

“April, for example, was the best month on record for personal income. That was the month that the stimulus checks got counted,” Quinlan said.

He said savings rates have also gone up, given the restrictions on in-store shopping.

And, some consumer credit has slowed, Warren Kornfeld at Moody’s said.

“It’s down very, very significantly with auto, because auto sales are down,” Kornfeld said.

He said the concern is whether borrowing will start to rise more as the government’s stimulus wears off.

COVID-19 Economy FAQs

What’s the latest on the extra COVID-19 unemployment benefits?

As of now, those $600-a-week payments will stop at the end of July. For many, unemployment payments have been a lifeline, but one that is about to end, if nothing changes. The debate over whether or not to extend these benefits continues among lawmakers.

With a spike in the number of COVID-19 cases, are restaurants and bars shutting back down?

The latest jobs report shows that 4.8 million Americans went back to work in June. More than 30% of those job gains were from bars and restaurants. But those industries are in trouble again. For example, because of the steep rise in COVID-19 cases in Texas, Gov. Greg Abbott, a Republican, increased restrictions on restaurant capacities and closed bars. It’s created a logistical nightmare.

Which businesses got Paycheck Protection Program loans?

The numbers are in — well, at least in part. The federal government has released the names of companies that received loans of $150,000 or more through the Paycheck Protection Program.

Some of the companies people are surprised got loans include Kanye West’s fashion line, Yeezy, TGI Fridays and P.F. Chang’s. The companies you might not recognize, particularly some smaller businesses, were able to hire back staff or partially reopen thanks to the loans.

You can find answers to more questions on unemployment benefits and COVID-19 here.

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