Pandemic-era ‘surplus savings’ are shrinking significantly
In a comment posted on a Federal Reserve Bank of New York blog in April, four economists argued that âwhile large by historical standards, the savings accumulated by American households during the pandemic do not appear to be “Excessive” for the extraordinary need of many American families.
Millions of Americans could once again be rocked by financial volatility with little collateral as new variants of the virus emerge. For some, this reality has already started.
âIt was tough even before the pandemic hit,â said Maria Patton, a 57-year-old former real estate agent whose finances were ruined by a recent divorce. âAnd when the pandemic hit, it became almost impossible. “
Ms Patton, who has a teenage son, had just been hired at Nordstrom in Los Angeles when the virus erupted and she was fired. Despite an immediate application for unemployment insurance in March 2020, she went without receiving benefits for more than two months. She tried to find work as a nanny – which had been her most recent job – but ended up moving to Tennessee, where she found the cost of living to be more affordable.
As she moved in the middle of last year, she received arrears for all the weeks she was eligible for Pandemic Unemployment Assistance – an emergency federal program to help freelancers and others who do not generally qualify for state benefits – which amounted to a lump sum sum of $ 15,000. Much of that money, Ms. Patton says, has been used to pay off debts, as well as to “pay for medical insurance out of pocket” because she cannot afford medical coverage and live in a hotel because that the owners of Nashville did not like its credit situation.
Ms Patton used more of her savings in January to move them both to Denver for a $ 25-per-hour nanny job she found online, which went well until what she gets Covid-19 and has to quit. Now she and her son work for Amazon Fresh, the grocery delivery service, earning $ 15 an hour. His savings dried up in September.
âNow I’m back to where I was,â she said. âI feel like a loser. I feel like a failure. Earning too much to qualify for assistance but not enough to afford stable housing, she fears that she and her son will live off her car soon after the holidays.