Pandemic Hits Wallets
This week, we talk about the pandemic’s continuing impact on people’s finances.
Welcome to our weekly chat about the environmental and social issues that influence the way we work, spend our money and live our lives. We're your hosts, Maitane Sardon and Dieter Holger. Want to get our newsletter every Wednesday? Hit the subscribe button in the upper right corner and please share with your friends!
Hi Dieter. Coronavirus lockdowns continue to take a toll on people’s finances. Layoffs have left many Americans too short on cash to pay their debts. According to credit-reporting firm TransUnion, 106 million accounts that were enrolled in deferment, forbearance or other relief starting March 1 were still in that state at the end of May, three times more than at the end of April. Skipped payments increased the most for student loans, to 79 million from 18 million accounts. Auto loans in deferment doubled to 7.3 million. I wonder how long lenders will allow consumers to skip or pause payments.
Credit-card, auto-loan and personal-loan lenders say they are allowing these deferments to buy time until the economy starts recovering and people resume their payments. In April, card issuers including Capital One, Discover Financial Services and Synchrony Financial said borrowers could pause their credit-card payments for a month or longer.
This comes as thousands of Americans continue to lose their jobs each week. The number of workers who are applying for and receiving unemployment benefits has stabilized but remains very high at 20.5 million. Experts say the data shows more workers are moving in and out of jobs and that there will be a higher number of layoffs as some businesses may never reopen.
And this could affect more than just finances. A Pew Research Center survey showed that 30% of respondents who see the coronavirus as a threat to their personal financial situation said they are experiencing more symptoms of psychological distress such as anxiety or sleeplessness, compared with 18% of those who said the pandemic doesn’t pose a risk to their finances.
People also sought out more financial education as the pandemic escalated. Between March 30 and April 5, business and financial news sites had 141.6 million unique visitors, nearly three times the weekly average in December, according to Comscore data. Investment and tax-related sites also saw a rise in the number of minutes people spent onsite.
On a different note, did you know that ride-hailing company Lyft committed to make every vehicle on its platform electric or zero-emissions by 2030? The company will help its drivers make the transition by giving them the option to rent Lyft-owned electric cars or offsetting higher costs with incentives. Uber, Lyft’s main competitor, has also taken steps to promote the adoption of more sustainable vehicles, although it hasn’t announced a specific target. Its Clean Air Fee in London, for example, charges passengers an extra 15 pence per mile to help pay for Uber drivers to switch to electric cars.
Both companies are also facing pressure from regulators to be more sustainable. London Mayor Sadiq Khan pledged to make the city carbon neutral by 2030 and introduced an ultralow-emissions zone where drivers have to pay fees if they don’t meet certain standards. Los Angeles is also looking to cut CO2 emissions and get more electric cars on the streets.
Speaking of sustainable mobility, the makers of electric vehicles are having a good year. Tesla’s stock is up almost 140% so far in 2020, and its rival NIO’s shares are up more than 80%. The stock price of Nikola, an electric- and hydrogen-truck designer that went public on June 3, has more than doubled since it began trading.
What am I looking at? The chart above shows the performance in the year-to-date of electric-car maker Tesla and its rival NIO, a Chinese company listed in the U.S. that specializes in electric autonomous vehicles. Both companies outperformed the S&P 500 and the Dow Jones Industrial Average.
Any other news you’re keeping your eye on?
Yes, the U.S. Justice Department has proposed rolling back legal protections for internet companies to encourage them to police content on their platforms more fairly. It would restrict their content-moderation practices and require them to address illicit and harmful conduct on their sites. Both Twitter and Facebook have said restricting immunity would threaten online speech. The DOJ said the internet has drastically changed since 1996, when the protections were first put in place, and the laws must reflect this. The proposal will need to be approved by Congress.
Although there is bipartisan support for reviewing these protections, this will not be an easy task in an election year. We will watch any developments closely. Now let’s open it up to our readers: Has the coronavirus lockdown affected your personal finances?
Share your thoughts below or catch us on Twitter. Your words could appear in our next edition! Have a great weekend and remember to wash your hands. 👋
Meet the team:
Elevate the Conversation is produced by the editorial teams of The Wall Street Journal and Dow Jones Newswires. Here's a little bit more about us, along with our contact information. We'd love to hear from you.
Dieter Holger, Reporter: I have a knack for uncovering values-based investing trends and I’m obsessed with spreadsheets and charts. I really enjoy ‘80s music, skateboarding and yoga (but I’m bad at both). dieter.holger@wsj.com@dieterholger
Maitane Sardon, Reporter: I have a passion for amplifying the voices of those at the center of stories. I love running on Barcelona’s beaches and binging on chocolate ice-cream to compensate (it’s all about balance). maitane.sardon@wsj.com@sardomaitane
Catherine Lindsay, Editor: I like breaking down complex ideas and explaining them. On the weekend, you’ll find me wandering the city with my film camera at the ready. catherine.lindsay@wsj.com@CathsLindsay
Tammy Lian, Designer: As a visual producer, I'm always excited by the challenge of creative problem solving. In my spare time, you can usually find me taking care of my ever-growing collection of plants and drinking tea. tammy.lian@wsj.com@violian.tammy
Good newsletter. I look forward to reading future issues, and back issues.