COVID-19

Household debt up 4% in the first quarter

Justin Ho Jun 12, 2020
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David McNew/Getty Images
COVID-19

Household debt up 4% in the first quarter

Justin Ho Jun 12, 2020
Heard on:
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

Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

Give me a snapshot of the labor market in the U.S.

U.S. job openings in February increased more than expected, according to the Labor Department. Also, the economy added over 900,000 jobs in March. For all of the good jobs news recently, there are still nearly 10 million people who are out of work, and more than 4 million of them have been unemployed for six months or longer. “So we still have a very long way to go until we get a full recovery,” said Elise Gould with the Economic Policy Institute. She said the industries that have the furthest to go are the ones you’d expect: “leisure and hospitality, accommodations, food services, restaurants” and the public sector, especially in education.

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

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