December Non-Prime Tracker Report


As 2021 draws to a close, the Center for the New Middle Class is reflecting upon what a unique year it was for non-prime consumers. Covid remains a big factor in many areas of daily life in America, and throughout this report you can see its impact on everything from employment to investment savings to debt. Americans, prime and non-prime alike, still feel more financially insecure as compared to before the pandemic. Despite this, more folks are opening investment accounts demonstrating resiliency and an optimism for the future.


Non-prime consumers still have unemployment levels that are above pre-COVID levels. While prime consumers avoided the immediate employment impact of COVID at the onset of the pandemic, they continue to see a steady growth in unemployment.

Contract Work

To combat employment uncertainty, prime workers have turned to contract work. While this has alleviated some of the risks of employment transitions after the COVID recession, it poses its own set of problems that will be seen below.

Household Job Loss

A curious fact that was lost in the chaos of the post-COVID employment problem was the fact that the percentage of households who experienced a job loss was growing during 2019. It was possible that the economy was already heading into a slowdown, which would not have been surprising after the longest growth period in American history. Job losses remained accelerated through 2020. 2021 has brought a drop in job losses for prime consumers, but only a steadying of the trendline for non-prime consumers.

The job losses that did not come with a severance package proved devastating in the first three quarters of the pandemic, especially for prime consumers. Non-prime had a jump that declined until just recently.

The job loss and unemployment trends point to an uneven recovery: some households have strengthened over the course of the pandemic while others wallow in financial disruption. We can see this fact in other metrics below, as well.

Many news outlets are reporting on the societal trend of people quitting jobs. At the onset of the pandemic, non-prime households were more likely to hunker down: they were significantly less likely to quit than they were prior to COVID. That trend has been reversing in the last two periods.

The percentage of prime consumers who quit their jobs spiked in 2020 but are now more likely to wait out the economic recovery. While job losses have come down for this group, unemployment is creeping up. The net effect may be a slight sense of unease.

We can see this employment story play out in the percentage of households who have a person who has started a new job. The pandemic spurred prime people to make a change in the early quarters of the recession, but non-prime people are making their moves in the 2021 recovery.

Part of the pre-COVID labor softness can be seen in the growing percentage of prime households who had a person start a second job. This trend accelerated during 2020 and is only now starting to come down throughout 2021. By contrast, non-prime households are starting to see the uptick in the latter half of 2021.

Running out of Money

For prime households, running out of money has a degree of seasonality: from the start of school through the end of the year, the percentage of households who run out of money climbs. Year-over-year, 2020 was materially worse for prime households than 2019. 2021 has been an improvement.

Non-prime households have not seen a material change in the number of households who have run out of money at least once in the prior 12 months. This speaks to the already high percentage in that category, but also a sense that non-prime consumers have learned to manage their month-to-month fluctuations through bill rationing and income forecasting.

Obtaining Credit

Consumers perceive that the credit markets are still tighter than they were prior to the pandemic. This fact might exacerbate the financial difficulty of running out of money.

Day to Day Expenses

The surge of inflation is a well-documented fact in the news, but it is often more difficult for consumers to quantify its direct affect to their household finances. For many non-prime consumers, day-to-day expenses were less manageable through 2020 due to a change in circumstances. Many reported ballooning grocery bills due to family hovering around the refrigerator all day during lockdowns. While within the margin of error, even prime households have seen a steady increase of the number of households struggling compared to the pre-COVID average.

Extraordinary Expense

Extraordinary expenses can disrupt a household’s finances in sudden ways and can reverberate into future months or can create black marks on their credit reports. Prime households have experienced a sine curve impact of unexpected expenses which peaked in Q4 of 2020 and has receded to a low point in October 2021. November 2021 data would suggest another upward trend.

Household Income Decrease

One of the most notable stories of the pandemic was the meaningful increase in the percentage of both prime and non-prime households that experienced a decrease in income. Even as the trend has come down, it has still not yet reached the level of the pre-COVID average. Even as we have measured year-over-year in the COVID period, we are still observing household income drops.

While maintaining employment is crucial to avoiding financial catastrophe, drops in income can have an eroding effect that puts increased month-over-month pressure on household finances. This can erase any resilience a household has and leave it more exposed to extraordinary expenses.

Higher Income Expectation

There is some ascending optimism that next year their income will be higher than last year. It has largely been a steady sense rather than a dramatic change of heart. This probably reflects the uncertainty of the pandemic, future shutdowns, inflation, and economic growth. Still, more and more households are coming around to an optimistic position every quarter.

Employment Stability

This optimism is mirrored in a growing sense of current job security.

Personal Debt

While stimulus checks helped many families lower their personal debt levels, more households are reporting that personal debt is less manageable than it was the prior year. Non-prime households felt the impact of the pandemic on their debt levels most acutely and have not yet returned to pre-COVID levels.

No Debt

The uneven effect of the pandemic can be starkly seen contrasting this graph with the table below. The graph represents the percentage of households who report no debt. Some simply have benefited through the recession and most of those are prime Americans in 2021. The table shows that the percentage of prime households who carried the different forms of debt have increased since pre-pandemic much more than non-prime consumers. Some households escaped debt; others compounded it.

Credit Card Ownership

Ownership of general-purpose credit cards amongst prime consumers collapsed right after the onset of the pandemic when financial services companies had no way of knowing how deep the recession would affect default rates. As seen below, those reporting having a credit card has rebounded in 2021.

Investment Account Ownership

If there is a silver lining, it is households who report having an investment account has increased for both prime and non-prime respondents. This has exposed more Americans to the economic growth from a surging stock market. Still, the percentage of non-prime households with a stake in broad economic benefit of stock market investment is pitiably low. Those who could benefit from improved household wealth the most are least likely to be enjoying its benefits.

Financial Insecurity

By in large, households still feel more financial insecurity than they did before COVID. This, of course, is unlikely to change until a broader economic recovery filters down to the least resilient households.

Article By:

Jonathan Walker

Jonathan Walker

Throughout the uncertainty of 2021, consumers remained resilient.