Majority of Americans cut back on spending because of coronavirus concerns

More than half of Americans (52%) have cut back on their spending as they grapple with uncertainties from the coronavirus pandemic that has brought much of the economy to a standstill, according to a new Bankrate survey

Among those who reduced their spending, 47% cited concern for the economy, 15% for stock market volatility, and 10% were worried about both. (The survey was conducted from March 20-24. The total sample size consisted of 2,486 adults.)

Among high-income households earning over $80,000, 53% reduced their spending out of concern for the economy, compared to 44% of lower-income households making less than $30,000. A greater share of high income-earners also reduced their spending because of stock market volatility, 20% vs. 9%.

“Higher-income households [have] more investments tied to the stock market and feeling a little bit more nervous as a result,” says Greg McBride, Bankrate.com’s chief financial analyst.

The wild stock market swings have been alarming to investors, but given that there is no near-term end in sight to the volatility, two-thirds of Americans who own investments or retirement accounts decided not to touch their portfolios.

[Read more: Coronavirus: What banks, lenders, utilities and more are doing to help customers financially]

“[Most investors] did nothing with their stock related investments despite a 30% plunge at the time we had done the polling. People are not bailing on stocks. You can do a lot of damage to your long-term financial security with knee-jerk reactions to short-term volatility,” says McBride. 

A passive approach doesn’t suit all investors: 13% moved money into stock investments and 11% moved money out, according to Bankrate. Higher-income households were more likely to have increased their stock investments, compared to lower-income households who were more likely to take their money out of stocks.

Millennials were more active with their stock market investments than Gen X and baby boomers. Nearly a quarter of millennials viewed the stock market volatility as an opportunity to invest more in stocks, compared to 13% of Gen X and 5% of boomers, according to Bankrate. On the flip side, millennials were also more likely to take their money out of stocks than other generations: 15% of millennials did, compared to 12% of Gen Xers and 8% of Baby Boomers.

“Unfortunately 15% said they moved money out. That’s the one that can come back and haunt you in the long run,” says McBride.

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