Nearly a quarter of Americans feel they are worse off financially compared to a year earlier, a Federal Reserve survey on the fallout and distress resulting from COVID-19 showed on Monday even as the central bank’s vice chairman forecast the best growth in 35 years for the economy.
“In the fourth quarter of 2020, nearly one-fourth of adults said that they were worse off financially compared to a year earlier, reflecting the economic fallout and distress resulting from the global COVID-19 pandemic,” the Fed said in its Economic Well-Being of US Households in 2020 survey.
The worst-hit were those who lost jobs in the economic downturn that followed the breakout of the virus, the central bank said.
“Those who were laid off during the pandemic typically had a relatively small financial cushion to begin with, as less than two-thirds of those who were laid off said they were doing at least okay financially in late 2019, before experiencing job loss,” it said.
The Fed said people who retained their jobs during the pandemic generally had stable or improving finances in 2020.
“However, those who suffered a layoff and an extended period of unemployment saw a deterioration of their financial circumstances,” the central bank said. “Layoffs during the pandemic were concentrated among workers with fewer financial resources, which further exacerbated pre-existing disparities in their financial well-being.”
There were disparities as well among the ethnic groups hit by the crisis, with minority Blacks and Hispanics, along with non-college educated people, taking a bigger impact than majority Whites and those with college degrees.
The survey was published as Fed Vice Chairman Richard Clarida said on Monday the economy could expand by as much as 7.0 percent in 2021, upping the central bank’s official forecast of a 6.5 percent growth.
If his forecast was met, it would be the fastest pace of US growth in 35 years, Clarida said, adding that first-quarter data signaled that such expectations were realistic.
The US economy shrank 3.5 percent in 2020 but rebounded by a dynamic 6.4 percent in the first quarter.
Clarida, however, warned that the rebound was still in “a very fluid period” citing the estimated 8 million jobs that remained lost nearly a year after the onset of the pandemic.