More Americans Are Moving Back to Pre-Pandemic Life — How Will It Affect Spending?

Young woman having fun on beach, using credit card for contactless payment.
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There’s no doubt that Americans are anxious to return to life the way it was before the COVID-19 pandemic — including the way they spend money. At least one new survey suggests many are doing just that. Even so, most consumers remain cautious about spending, and the Delta variant could throw even more caution into the mix.

See: How to Curb Your ‘World Reopening’ Spending
Find: How to Save $500 This Month

The second-quarter State of Personal Finance Study, a survey of 1,004 U.S. adults conducted by Ramsey Solutions in June and released on Monday, found that nearly six in 10 respondents are returning to pre-pandemic norms and are ready to spend money on something other than essentials. But more than 80% said that while life is returning to normal, their old spending habits might not.

“Americans haven’t forgotten the money lessons they learned during the COVID-19 pandemic,” the study said. “Many Americans who reined in spending and ratcheted up savings to ride out the pandemic say some of those habits are here to stay.”

Sixty-three percent of the survey respondents said they had big-ticket purchases planned for the current quarter, with over 27% of those saying the purchase will involve summer travel.

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See: How to Travel Safely Amid the Delta Variant Surge
Find: How You Can Still Book a Last-Minute Summer Vacation

Meanwhile, Mastercard CFO Sachin Mehra recently offered a bullish take on U.S. consumer spending, saying it is on pace to exceed pre-pandemic levels based on data from the company’s second-quarter earnings report.

“People are looking to spend and they are exercising that intent right now,” Mehra told CNBC. “Does the stimulus play a part in that? Absolutely. Does the high level of savings which are there across the board play a part in that? Totally. At the end of the day, people are exercising their intent to spend.”

The wild card is how the Delta variant will impact overall consumer spending. Some economists say the variant has already caused a slowdown in some sectors of the economy.

See: 10 Signs Your Spending Is Out of Control — and How to Address It
Find: 35 Surprising Cities With Low Costs of Living

As The New York Times reported last week, Chase credit card spending in certain travel and entertainment categories has fallen recently because of the variant, according to a JPMorgan research report from senior economist Jesse Edgerton and economist Peter McCrory. Chase card spending data shows that airline spending has fallen nearly 20% from a mid-July peak, the report said. 

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One thing to keep an eye on moving forward is how the child tax credit will impact spending. According to the Ramsey Solutions study, 70% of qualifying parents say they are afraid to spend monthly tax credit payments because of uncertainty over how it will affect their income taxes next year.

See: How Will Back-to-School Shopping Be Different This Year?
Find: Suze Orman’s Top 26 Tips That Will Save You From Financial Disaster

Recent changes to the child tax credit allowed eligible parents to get half of the credit in monthly payments from July through December, in sums of $250 a month per qualifying child between the ages of six and 17 and $300 a month per qualifying child under the age of six. Parents can claim the rest of their credit when they file their 2021 taxes next year.

But as the Ramsey study noted, only half of qualifying parents said they “clearly understand” what the credit means in terms of their tax obligations. Families that have already received the payment are split on what to do with the money. Thirty-eight percent of qualifying parents said they will save the payments, 35% said they will pay bills with them, 28% said they will invest the payments for their child’s future and 27% said they will spend the payments on necessities.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

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