Show an ad over header. AMP

Death spiral for consumers

Despite some recent good news about dwindling household debt, the financial health of U.S. consumers is rapidly deteriorating — and families with children are faring the worst.

Why it matters: As Congress deadlocks over pandemic relief and President Trump issues executive orders of dubious potency, many Americans are suffering from a quintuple whammy: unemployment, overdue rent, mounting bills, food insecurity and health fears.

Where it stands: By some measures, we're doing quite well.

  • People are paying off their credit cards at a surprising clip.
  • Personal income grew in the second quarter of 2020 (thanks to hefty checks from the government).
  • Investors are reveling in stellar market performance as the markets — somewhat jarringly — shrug off the dire economy.
  • Total household debt fell in the second quarter of 2020 — the first time household debt has decreased since 2014.

But by more realistic and meaningful measures, people are in terrible shape.

How it works: Personal finance experts say the good-news indicators mask the true face of America's predicament.

  • A lot of people were getting by on the extra $600 in their unemployment checks and $1,200 one-time relief checks.
  • Now that those have expired — along with many eviction moratoriums — we're likely to feel the full force of the recession that started in February (just before the coronavirus pandemic hit).

What they're saying: "There are two Americas out there," Ed Mierzwinski, senior director of the federal consumer program at U.S. PIRG, tells Axios.

  • "There are a lot of people who are just weathering the storm, hunkered down at home. And there are a lot of people who are getting paid less than they used to be paid, and they are painfully going through this pandemic economic crisis."
  • Mierzwinski is part of a coalition of consumer advocates who are seeking to ban debt collection and negative credit reporting during the pandemic.
  • He says he has seen "no empathy" from debt collectors (contrary to statements by the lending industry that they are being lenient).
  • March, April, May and June saw a record number of complaints to the Consumer Financial Protection Bureau, per Mierzwinski. "There's going to be a cliff," he says.

Families are suffering the most. "What we see with households with children is that they're more likely to experience a job loss by somebody in the household, and they're more likely to experience a decline in overall income," Wilbert van der Klaauw of the Federal Reserve Bank of New York, tells Axios.

  • Families with kids are also "more likely to report relying on food donations and financial support from friends, families and other social networks," van der Klaauw says.
  • These conditions could have severe consequences for the children in those households.

There's "no indication that consumers expect the recession to end anytime soon," according to Richard Curtin, director of the University of Michigan Surveys of Consumers.

  • "What people are believing now is they need more savings to hedge any future development in the pandemic," Curtin tells Axios — which is far easier for upper-income people than for low-income people who have lost their jobs.
  • "Unfortunately, those most at risk have the least ability to save, and those who are least at risk have the most ability to save — and have saved."

People of color are at the greatest risk, says Thea Garon of the Financial Health Network, a clearinghouse for information on how consumers are doing.

The bottom line: Even if Washington does pony up more financial support for cash-strapped Americans, there's little hope for many people of long-term financial stability.

FDA chief vows agency will not accept political pressure on coronavirus vaccine

Food and Drug Administration Commissioner Stephen Hahn promised that "science will guide our decision" for a coronavirus vaccine at a Senate hearing on Wednesday.

Why it matters: More Americans are expressing doubt about a first-generation vaccine, despite President Trump's efforts to push an unrealistic timeline that conflicts with medical experts in his administration.

Keep reading... Show less

CEO confidence rises for the first time in over 2 years, but still remains at decade low

Data: Business Roundtable; Chart: Naema Ahmed/Axios

A closely-watched CEO economic confidence index rose for the first time after declining for nine straight quarters, according to a survey of 150 chief executives of the biggest U.S. companies by trade group Business Roundtable.

Why it matters: The index, which still remains at a decade low, reflects corporate America's expectations for sales, hiring and spending — which plummeted amid uncertainty when the pandemic hit.

Keep reading... Show less

Career official says White House political appointees "commandeered" Bolton book review

A former career official at the National Security Council claims her pre-publication review of former national security adviser John Bolton's explosive book on President Trump was "commandeered by political appointees for a seemingly political purpose," according to a letter from her lawyers filed in court on Tuesday.

Why it matters: The White House fought against the publication of Bolton's book for most of the year on the grounds that it contained harmful and "significant amounts of classified information."

Keep reading... Show less

House Democrats unveil sweeping reforms package to curtail presidential abuses

House Democrats on Wednesday unveiled sweeping legislation aimed at preventing presidential abuse and corruption, strengthening transparency and accountability, and protecting elections from foreign interference.

Why it matters: While the bill has practically no chance of becoming law while Trump is in office and Republicans hold the Senate, it's a pre-election message from Democrats on how they plan to govern should Trump lose in November. It also gives Democratic members an anti-corruption platform to run on in the weeks before the election.

Keep reading... Show less

TikTok's content-moderation time bomb

When the dust finally clears from the fight over TikTok, whoever winds up running the burgeoning short-video-sharing service is likely to face a world of trouble trying to manage speech on it.

Why it matters: Facebook’s story already shows us how much can go wrong when online platforms beloved by passionate young users turn into public squares.

Keep reading... Show less

Making sense of China's very vague new plan to reach "carbon neutrality"

Major climate news arrived on Tuesday when Chinese President Xi Jinping said China would aim for "carbon neutrality" by 2060 and a CO2 emissions peak before 2030.

Why it matters: China is by far the world's largest greenhouse gas emitter. So its success or failure at reining in planet-warming gases affects everyone's future.

Keep reading... Show less

Less travel is causing the NBA to see better basketball

In addition to keeping out the coronavirus, the NBA bubble has also delivered a stellar on-court product, with crisp, entertaining play night in and night out.

Why it matters: General managers, athletic trainers and league officials believe the lack of travel is a driving force behind the high quality of play — an observation that could lead to scheduling changes for next season and beyond.

Keep reading... Show less

Senate Republicans release report on Biden-Ukraine investigation with rehashed information

Senate Republicans, led by Sens. Ron Johnson (R-Wis.) and Chuck Grassley (R-Iowa), on Wednesday released an interim report on their probe into Joe Biden and his son's dealings in Ukraine.

Why it matters: The report's rushed release ahead of the presidential election is certainly timed to damage Biden, amplifying bipartisan concern that the investigation was meant to target the former vice president's electoral chances.

Keep reading... Show less



Get Goodhumans in your inbox

Most Read

More Stories