In the US economy, consumers are always the canary in the coal mine because it represents about 68% of gross domestic product. Where go consumers goes GDP. According to a new report from the Consumer Financial Protection Bureau (CFPB), things aren't going wonderfully for the average person on the street.
During and after the initial onset of the pandemic, government financial relief and expanded unemployment helped millions, creating "widespread improvements in financial well-being from June 2019 to February 2021," the CFPB report says. "Consumers rapidly decreased credit card debt from March to June 2020 and credit card debt decreased again after Economic Impact Payments in January and March 2021. These improvements were widespread across race and ethnicity, age, income, and for consumers living in rural and urban areas or who were financially vulnerable before the pandemic."
But things turned around for the worse between February 2021 and February 2022 and largely landed back where things were in 2019. "Fewer households had difficulty paying bills and expenses in the year preceding February 2022 than before the pandemic, but difficulty paying bills became more common between 2021 and 2022," says the report.
Recommended For You
Hispanic consumers, consumers under 40 years of age, and low-income renters saw rapid deterioration. Credit card debt is up "substantially." Although unemployment remains low, "many consumers are not prepared financially for a period of unemployment, despite building large cash buffers and paying down debts during the first years of the pandemic."
According to CFPB records, on loss of their main source of income, 37% of households couldn't cover their expenses for more than one month, and that includes getting help from family and friends, burning through their savings, borrowing money, and selling assets. Look at black and Hispanic households and the number jumps to 51%.
Remember that driving unemployment upward is one of the signs the Federal Reserve is looking toward under the assumption that excess consumer wages are driving inflation — even though consumers pay increases on average are far behind price increases. That turns into trouble paying bills, let alone spending more at retail stores.
"When households did have difficulty paying for a bill or expense, half also had difficulty paying for food, slightly more than half had difficulty paying the mortgage or rent, 44 percent had difficulty with a medical expense, and 70 percent had difficulty paying for utilities," the report said.
Should there be a significant increase in unemployment that that Fed has apparently been trying to engineer, that could mean a lot of income uncertainty for many landlords, with no congressional emergency packages in sight.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
