A new study released today by Elevate’s Center for the New Middle Class (CNMC) reveals that prime consumers (those with credit scores of 700 and above) are exhibiting significant financial weakness due to the coronavirus pandemic while conditions for non-prime consumers, a population of approximately 150 million in the United States, seem to be stabilizing.
The report, which surveyed over 1,000 prime and non-prime Americans during the month of June, reveals notable strain among prime consumers. In particular, layoffs among prime consumers or their spouse/partner have soared 78% from pre-COVID levels. The biggest single-month increase in this metric occurred in June, jumping from 30% to 41%, or 37%. This is the first time in the 18 months since CNMC has been tracking data that prime consumers have been laid off at a higher rate than non-prime.
"This is a trend worth watching closely as it suggests that American households may be under more duress than is commonly thought," said Jonathan Walker, Executive Director of the CNMC. "If the pandemic continues to worsen, we may see consumers with excellent credit slide out of prime status due to job loss, unexpected medical bills, or a creeping debt load."
Non-prime consumers, or those with credit scores below 700, are not showing a corresponding erosion in sentiment. In terms of job security, 80% of non-prime consumers reported feeling stable in their employment in June, levels that haven't been reached since early February and a four-point increase over the one-year average of this metric. The level of worry among prime consumers, on the other hand, has returned to levels last seen in April.
Despite economic conditions that remain unstable and challenging, both prime and non-prime consumers are exhibiting fiscal prudence.
"While prime consumers are experiencing relatively more pandemic-related financial weakness than non-prime consumers, household income for both groups has declined over the last month and the percentage of people with more debt than savings is decreasing," said Walker. "This suggests a commonality between the two groups as everyone tightens their belts and prepares for continued economic volatility."
Link to full report: https://www.newmiddleclass.org/non-prime-tracker-june/
About The Research
CNMC's sentiment research began in September 2018 and compares the responses of prime and non-prime American consumers on a weekly and monthly basis via online questionnaire. Respondents are 16 to 64 years old with at least some responsibility in managing their household’s income; students and retirees are excluded.
About The Center for the New Middle Class
Elevate's Center for the New Middle Class conducts research, engages in dialogue, and builds cooperation to generate understanding of the behaviors, attitudes, and challenges of America's growing "New Middle Class." For more information, please visit: newmiddleclass.org.
Elevate, together with its bank partners, has originated $8.4 billion in non-prime credit to more than 2.5 million non-prime consumers to date and has saved its customers more than $7.0 billion versus the cost of payday loans. Its responsible, tech-enabled online credit solutions provide immediate relief to customers today and help them build a brighter financial future. The company is committed to rewarding borrowers’ good financial behavior with features like interest rates that can go down over time, free financial training and free credit monitoring. Elevate’s suite of groundbreaking credit products includes RISE, Elastic, and Today Card. For more information, please visit http://www.elevate.com.
Sloan Bohlen, 817-928-1646
James McCusker, 203-585-4750