Majority Have Cut Spending Amid Coronavirus Crisis

Two-thirds have not touched their retirement or investment accounts despite market volatility

News Release,

New York – March 31, 2020 – As the country navigates the financial impact of the coronavirus outbreak, 52% of U.S. adults intentionally reduced their general spending due to the pandemic and its effect on the economy
and stock market, according to a new report.

This includes 47% who actively cut current spending due to concerns of the economy and 15% who decreased current spending because of concerns regarding the stock market and 10% who cite both as a factor. Another 43% have not intentionally cut back on spending.

A majority of all income groups have actively reduced spending, but the propensity to do so increased with income. Among high-income households ($80k+), 53% cut back due to the economy versus 44% of lower-income households (under $30k). Additionally, one-fifth of high-income households decreased spending due to stock market volatility (vs. 9% lower-income households).

“More than two-thirds of U.S. economic output is tied to consumer spending, and most Americans are actively cutting their spending due to pervasive worries about the COVID-19 impact on the economy and stock market,” says chief financial analyst, Greg McBride, CFA. “Take this as validation of a U.S. economic recession.”

Despite turbulent times, two-thirds (66%) of U.S. adults with retirement and/or investment accounts intentionally did nothing with their stock-related investments (such as mutual funds or individual stocks) in
response to recent stock market volatility. More investors moved money into stock-related investments (13%) than out (11%).

“Americans are cutting their spending but they’re not bailing on stocks despite an unprecedented drop of more than 30% at time of polling,” says McBride. “Two out of every three households with retirement or investment accounts stood pat and did not make any changes to their stock-related holdings.”\

Most investors in households with incomes of $30,000 or more stayed the course with their stock-related investments in response to the volatility (62% for $30,000-$49,999; 71% for $50,000-$79,999; and 66% for
$80,000+) while high-income households ($80k+) were more likely to have added to their stock-related investments (16%, vs. 13% for under $30,000 and $30,000-$49,999; and 10% for $50,000-$79,999). However,
lower-income households (under $30k) had the highest likelihood of moving money out of stocks (20%).

Among age groups, millennials (ages 24-39) were more likely than Gen Xers (ages 40-55) and Baby Boomers (ages 56-74) to contribute more to stock-related investments in response to the volatility (24% of millennials vs.
13% for Gen X and 5% of Boomers). Millennials were also most likely to move money out of stocks than those older generations (15%, vs. 12% for Gen X and 8% of Boomers).

Surprisingly, 1 in 10 investors indicated they weren’t aware of the stock market volatility.

Methodology: commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,486 adults (aged 18+), including 1,174 with investment accounts.

Fieldwork was undertaken on March 20-24, 2020. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results

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David M. Higgins II

David M. Higgins was born in Baltimore and grew up in Southern Maryland. He has had a passion for journalism since high school. After spending many years in the Hospitality Industry he began working in Digital Marketing, eventually leading him back to his passion. David started The Southern Maryland Chronicle in December 2017 and has grown it to become the #1 news source in Southern Maryland.

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