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76% of Americans worried COVID-19 will trigger economic recession

More than 2 in 5 U.S. adults (45%) plan to take or have already taken certain financial actions to preserve cash as a result of the coronavirus negatively impacting the economy. 

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Updated: October 2, 2020
  • Immediately after and during two record-setting stock market crashes (Black Monday 2020 and Black Thursday 2020) respectively, roughly 2 in 3 (68%) U.S. adults feel anxious about the impact the coronavirus is having on the financial markets.

  • Many Americans (45%) have taken or plan to take certain actions to preserve cash as a result of the coronavirus negatively impacting the economy. 

  • Worry that the coronavirus will trigger an economic recession is high across all generations. However, Millennials (59%) are more likely to have taken or plan to take certain actions to preserve cash as a result of the coronavirus negatively impacting the economy than Gen Zers (44%), Gen Xers (47%) and Baby Boomers (35%).

Financial anxiety may be driving more Americans to preserve cash 

On Monday, March 9, 2020, the global stock markets suffered from the greatest fall since the 2008 Great Recession, largely due to the coronavirus (COVID-19) outbreak and its far-reaching impact on the oil, travel and manufacturing industries. This was followed by an even-steeper market crash on Thursday, March 12, 2020, after the U.S. government announced its travel ban on Europe. By the end of the week, 2 in 3 (68%) U.S. adults reported feeling anxious about the impact of coronavirus on the financial markets, according to a recent Tally survey conducted online by The Harris Poll among more than 2,000 U.S. adults age 18 or older.

The market crash may also be stoking fears of an even-greater downturn. Currently, 76% of Americans are worried that the coronavirus will trigger an economic recession. This sentiment was similar across all generations: 71% of Gen Zers (18-23 year olds), 76% of Millennials (24-39 year olds), 76% of Gen Xers (40-55 year olds) and 76% of Baby Boomers (56-74 year olds). 

As fear turns into actions, many U.S. adults (45%) plan to take or already have taken certain steps to preserve cash as a result of the coronavirus negatively impacting the economy. Some common financial actions that Americans plan to take or have already taken to preserve cash are: delaying major or non-essential purchases (36%), making only the minimum payments on credit card bills and other debt (16%) and relying more on credit cards for daily expenses (10%). Only a small share of U.S. adults plan to (or have already) buy (12%) or sell (8%) stocks as a result of the coronavirus negatively impacting the economy.

Millennials, many of whom may be still recovering from the previous recession, are the most likely to plan to take certain financial actions (or have already done so) to preserve cash (59% vs. 44% of Gen Zers, 47% of Gen Xers, and 35% of Baby Boomers). This includes delaying major or non-essential purchases (44%), making only the minimum payments on credit card bills and other debt (23%) and relying more on credit cards for daily expenses (15%).

 

Navigating your money if you have financial anxiety right now. 

First, take a deep breath. Many of the headlines out there right now are scary, but take a step back and look at the big picture. Tally’s personal finance expert, Bobbi Rebell CFP® shares her best tips on how to manage your money during times of uncertainty. 

Resist the urge to try to time the stock market  

Historically, selling stocks in a panic is likely to cost you. Not only could you be locking in lower selling prices, you now face the challenge of when to put the money back to work something you will want to do especially if this is your retirement savings, Rebell says. Many of the biggest one-day gains happen soon after a huge drop, though you can’t predict it. Just look at what happened on Thursday, March 12, 2020, with the market having its worst one-day loss since the stock market crashed in 1987. The very next day, the S&P 500 recouped almost all of those losses. Rebell doesn’t advise people to try to buy on the dips. Instead, invest at regular intervals, which is what most 401(k)s do when you contribute on a regular basis, so that you smooth out the volatility and lower your risk.

Automate your debt repayments and savings

If you haven’t already, put your money on autopilot. It might be tempting to reserve your cash and stop or lower payments on your debts. Don’t. Many Americans have credit card debt (47%), which is often the first thing people default on when money is tight to preserve cash. Rebell says the best way to protect your finances when the market is volatile is to eliminate your high-interest debt, which will give your budget more breathing room for day-to-day expenses. One way to make sure you do this is to automate your payments with autopay. The same goes for making auto-deposits toward your emergency fund.

Lower the interest rate on your debt

The Federal Reserve made its second emergency rate cut within the same month on March 15, 2020, in response to the economic impact of the coronavirus. Lowered by a full percentage point, the federal rate’s new target range is between 0% and 0.25%, which means interest rates will likely fall in tandem. Rebell says now may be a good time to look into refinancing or consolidating your financial debt to get a lower rate.  

 

Methodology
This survey was conducted online within the United States by The Harris Poll on behalf of Tally from March 11-13, 2020, among 2,001 U.S. adults age 18 and older, among whom 985 have credit card debt. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact press@meettally.com

 

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