As social gatherings are limited and businesses shutter operations to reduce the spread of COVID-19, millions of Americans could be laid off in the next couple of months as the economy dives into a depression.
Most of the job loss will be seen across both the services and manufacturing sectors. The National Restaurant Association estimates that five to seven million jobs could be lost in the next three months. While Treasury Secretary Steve Mnuchin said if government stimulus is not directed at businesses and households, upwards of 33 million jobs could be eliminated.
With a depression imminent, WalletHub anticipates 67 million Americans could have difficulty servicing their credit cards due to virus impacts. As we've routinely pointed out, credit card usage soared to a record high in December.
"Roughly 67 million Americans anticipate having trouble paying their credit card bills because of the coronavirus. Their struggles could easily ripple through the economy if left unaddressed, especially considering the more than $1 trillion in credit card debt currently owed by U.S. consumers," said WalletHub CEO Odysseas Papadimitriou.
According to WalletHub's survey completed on March 9-12, the virus is the most significant stressor among Americans. The second stressor is money problems, then the 2020 election, and people's current job situation.
"We've seen a lot of panic buying as a result of the coronavirus, with people purchasing things like toilet paper en masse, largely because they don't know what else to do. Furthermore, 94 million Americans have canceled or plan to cancel travel plans due to the coronavirus," said WalletHub analyst Jill Gonzalez.
"Less apparent, however, is the panic saving that people are engaged in right now. Around 158 million Americans, or roughly 63% of adults, say they are saving more, as opposed to buying more, as a result of this crisis. If there's a bright side to all of this, people saving more money than usual might just be it."
Credit card companies have started rolling out relief programs to affected customers.
"Yes, credit card companies should give relief to affected customers, just like they've done during major natural disasters in recent years," Papadimitriou said.
We wonder if the proposed stimulus checks for Americans, ranging from $1,000 to $2,000 per person, will be used for paying credit card bills or be used at Costco stores to buy toilet paper and milk?