The Covid-19 pandemic has caused unprecedented economic disruption, leading to a sharp increase in unemployment and reduced wages. The economic downturn and the consequent rise in inflationary pressure have caused considerable hardship to many American households. Recent research suggests that nearly 27% of households have resorted to taking money out of their savings in order to make ends meet. Of these households, 54% reported using their savings to pay for basic expenses such as groceries and rent.
The personal savings rate has drastically decreased to 3.4% in December 2020, compared to 33.8% in April 2020. This hints at the fact that households are facing severe financial strain due to the pandemic.
Credit card debt has also surged to a record high of $986 billion, while total U.S. household debt has touched a record $16.9 trillion. This suggests that many households are struggling to cope with the rising inflationary pressure. To make matters worse, they are resorting to their savings and credit cards to pay for basic necessities.
Overall, the Covid-19 pandemic has caused immense economic hardship to many American households. This has led to a sharp decrease in the personal savings rate, as well as a surge in credit card debt and total household debt. The research suggests that households are struggling to cope with the inflationary pressure, and are relying on their savings and credit cards to make ends meet.