As the economic damage caused by the coronavirus continues to worsen, new research from UBS reveals how consumer saving habits have changed based on income: while many low-income households are planning on saving less of their income over the next three months than they previously did, nearly one third of high-earning households are planning to save more.
Among households that earn more than $200,000 per year, 28% are planning to save a larger portion of their income in the future.
20% of households earning less than $60,000, on the other hand, anticipate that they will save less.
9% of households earning between $100,000 and $200,000 say they’ll increase their savings, and households earning between $60,000 and $100,000 generally say they’ll save the same amount.
In general, high-earning households already tend to save more than low-earning households do, both as a percentage of each paycheck and in absolute terms, UBS says.
More than 24 million Americans work in the five sectors (identified by Moody’s chief economist Mark Zandi) that are at the highest risk for a major slowdown in the United States: mining/oil and gas, transportation, employment services, travel arrangements, and leisure and hospitality.
“One month could wipe out 10 years of progress,” in reducing income inequality, Mark Muro, a senior fellow at the Brookings Institution, told The Atlantic. “A huge service-sector recession is coming, and we’re talking about more than 10 million jobs at risk that are often low-wage, low-benefit, or tip-based.”
The historic CARES Act—the $2 trillion federal stimulus package signed by President Trump two weeks ago—includes sweeping provisions to expand unemployment benefits. It allocates $349 billion in loans for struggling small businesses and provides direct payments of $1,200 to most Americans. The federal government is likely to pass at least one more fiscal relief package, according to economists at Goldman Sachs, which is likely to expand unemployment benefits even further and may even include another round of direct payments to individuals.