Despite recession, many Americans have been paying off debt and building savings during pandemic

by Laura Mize · Oct 27th, 2020 3:59 pm

Last Updated Oct 28th, 2020 at 7:15 pm

Government stimulus measures and forbearance from lenders have helped many Americans stay afloat financially during the coronavirus pandemic, even allowing significant numbers of people to reduce debt and increase their savings, according to a report from The New York Times.

While pandemic lockdowns have led to lost jobs and reduced incomes for many Americans, they have also helped in some ways. With months of little to no opportunities for taking vacations, dining out, visiting movie theaters, exercising in a gym, or getting a professional haircut, many Americans have seen their spending drop.

Total household debt in the United States declined in the second quarter of this year, according to the Federal Reserve Bank of New York, for the first time since 2014. A significant amount of that reduction was a $76 billion drop in credit card balances, the largest ever recorded.

The personal savings rate has also been high this year, topping out at $6.4 trillion for the month of April. Though the rate has declined since spring, it remains higher than this time a year ago, according to data from the U.S. Department of Commerce's Bureau of Economic Activity. Americans' average FICO score reached 711 in July, a new record.

Banks have stockpiled money to prepare for soaring loan defaults, but have not faced the huge numbers of defaults they expected to.

Despite, the increased savings, there has been plenty of economic suffering. Since May, 8 million Americans have slipped into poverty. Some of the hardest hit people are those whose realities are simply not accounted for in loan and credit data.


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