Many Americans Haven’t Recovered Yet: Financial Health Network

The Financial Health Network today released its latest Financial Health Pulse Points for the second quarter of 2021. This regular examination of consumer transactions found that despite the economy reopening post lockdowns, most household incomes remain flat, savings are stagnant, and spending declined slightly for most categories. Overall, this reinforced financial health inequities for low-income households and those experiencing hardships, and could forecast further divergence in the latter half of the year.

As stimulus payments ended personal savings rates dropped from a high of 26.9 per cent in the first quarter to 9.4 per cent. When adjusted for stimulus and tax payments incomes remained flat. Liquid account balances did end the second quarter 11 per cent higher than they were at the beginning of the year. The balance peak occurred in late April following the third stimulus disbursement

Those stimulus payments did help consumer spending, as after their effect subsided overall consumer spending fell by almost nine per cent. The one outlier was credit card spending by households with six-figure incomes. They charged more travel and recreation expenses.

“The Pulse dataset shows that recovery is not yet showing up for people who need it most,” said Rob Levy, VP of research and measurement at the Financial Health Network. “The stimulus and tax refunds did their job helping financially vulnerable people make ends meet over the last quarter and while the Child Tax Credit is expected to help families, an uneven recovery could put those gains in jeopardy in the second half of 2021.”

Pulse Points offers regular, timely updates on financial health in America using account and transaction data from the Financial Health Pulse. These briefs supplement the annual Pulse Trends Reports released each fall, which highlight broad trends on the financial health of Americans and how they spend, save, borrow and plan. Analysis for the Pulse Points is based on transactional and account data from approximately 500 members of USC’s consumer panel who agreed to share their data through a secure platform that leverages Plaid’s API.

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