While most households are in a better financial shape now than they were when the COVID-19 pandemic began, the economic benefit from financial aid provided by the federal government is rapidly fading, especially for those at the bottom of the income ladder, according to a published report, which warns that fewer consumers have savings to fall back on in case of an emergency.
Many families and households received buffers in the form of stimulus payments or increased unemployment benefits at various points during the pandemic. But those have largely dried up, and people are finding themselves back where they were when the pandemic started, or worse, with less.
The average checking account balance for people earning less than $30,296 per year was $961 at the end of September, according to data tracked by JPMorgan Chase. At the time, that represented an increase of $393 from the same period of 2019, before the pandemic hit. So while on a percentage basis the amount in their bank accounts was significantly higher, it still did not provide much of a financial cushion. And in the subsequent months, that balance has likely retreated back to closer what it was before the pandemic, especially thanks to rising inflation which is making everyday products like food, clothing, and gas more expensive.
The excess savings created by the economic stimulus packages could run out for “working- and middle-class families” as soon as early next year, according to one report.
One-third of consumers reported having less money to fall back on in case of an emergency compared with before the pandemic, and only one-sixth reported having more, according to the report.
Heading into an income tax season where many people have already received portions of their refunds in the form of child tax credit payments, the accounts receivable management industry might have a long road ahead at convincing individuals to make good on their unpaid debts.
