MNI POLICY: Fed Survey: 3 in 10 Can't Cover Job Loss Expenses

By Evan Ryser

     WASHINGTON (MNI) - One in five Americans surveyed by the Federal Reserve in

early April said they either lost a job or experienced a reduction in work hours

in March, the Fed reported Thursday, adding that 3 out 10 could not cover three

months of expenses in case of job loss. 

     The central bank's 2020 Survey of Household Economics and Decisionmaking

pointed to severe job losses in March that focused particularly on households

with lower incomes, thereby exacerbating prior financial challenges. It was a

marked change from positive results for most adults at the end of 2019. 

     The Fed expanded its annual online survey, covering 12,000 adults in

October and weighted to be nationally representative, with a supplemental survey

of just over 1,000 adults conducted April 3-6. The supplemental survey was

conducted before most benefits were received from the CARES Act and focused on

labor market effects and households' overall financial circumstances. 

     According to the report, 13% of adults, representing 20% of people who had

been working in February, reported that they lost a job or were furloughed in

March or the beginning of April, where the most severe job losses were

concentrated with lower incomes, the report said. 

     The survey said 6% of all adults had their hours reduced or took unpaid

leave. 

     Fed Chair Jay Powell Wednesday previewed the report saying that 40% of U.S.

households with less than USD40,000 in annual income included someone who has

lost a job since February. 

     "Three in 10 adults in 2019 said they could not cover three months of

expenses using their savings or borrowing in the case of a job loss, indicating

that they were not prepared for the current financial challenges," the report

said. 

     Among those who lost a job in March, however, 91% anticipated that they

would return to work for the same employer or indicated they had already

returned to work, the report said. 

     The Fed added that some workers took new or additional employment in March,

with 7% of adults reporting increased hours worked and 4% of adults taking on a

side job to supplement income. 

     Other highlights: 

     - Fewer adults reported that they were either "doing okay" financially or

"living comfortably" than six months earlier (72% vs 75% previously). 

     - 23% said their income in March was lower than in February.

     - One-fifth of employed adults reported that they could not take any time

off without a reduction in income.

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

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