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Financial Health Pulse 2021: Two-thirds Of The ...

It has been a year of back-and-forth progress. Financial health improved particularly for Black, Latinx, Asian Americans, and Americans with household income under $30,000. However, the gap between men and women increased: men saw financial health improvements since 2020, and women did not.

Financial Health Pulse 2021: two-thirds of the ...

Despite the percentage increases in financial health in particular racial demographics, inequities remain: 39 percent of White identifying people are financially healthy, with only 21 percent of Black and 24 percent of Latinx identifying people.

Women also did not see the same financial health gains in 2021 as did men. The proportion of men considered financially healthy increased from 39 to 43 percent, while women considered financially healthy stayed at 26 percent.

By geographics, people living in the Northeast and Midwest regions were more likely to be financially healthy (37 percent each) than people elsewhere, like the South. The South saw the most significant improvement but still the lowest financial health levels in the country.

Financial health improved for the second consecutive year, as government relief programs and personal spending reductions related to the pandemic continued. However, two-thirds of Americans are still not considered Financially Healthy and racial disparities remain wide.

Relief programs appear to have had profound effects on the financial health of historically marginalized groups. Black, Latinx, and Asian American people, as well as people making less than $30,000 in household income, saw significant gains in their financial health over the past year.

In addition to our annual report, FinHealth Spend Research produces briefs and analyses of various products throughout the year. We invite you to explore all of our 2022 research, learn about the methodology that informs all our research this year, and access a primer on how we define and measure financial health.

However, we see massive disparities in spending by race and ethnicity, income, and financial health tier. These generally are in line with the disparities also seen in 2020 and reflect economic and racial inequities in access to affordable financial services, as well as deep-seated systemic and structural barriers for people of color.14 In short, traditionally underserved households continue to bear an outsized proportion of the costs for financial services.

This report provides a tool for financial services providers, researchers, policymakers, and advocates to better understand trends in consumer spending and identify opportunities to support more equitable financial health policies and products. We continually strive to enhance our analyses and encourage engagement from readers to better understand how our work can support policy and product developments that contribute to financial health. We also welcome outreach from policymakers, researchers, and others who are interested in exploring our dataset in greater detail.

Innovation in highly regulated and complex industries can be extremely costly. This is especially true in financial services, where the legal and regulatory environment creates significant barriers to entry and sustainability for new consumer finance businesses. It typically takes far longer for entrepreneurs to take ideas to prototype, increasing both the costs and the likelihood of failure. Ongoing compliance, risk management, and partner requirements drive increased operating expenses. Investors, therefore, place significant premiums on entrepreneurs with proven track records, industry experience, or strong professional connections that can shorten the time to market and/or reduce execution risk. Despite fintech being touted for its promise to increase financial health amongst diverse and underserved populations, these dynamics have resulted in a starkly homogenous sector. According to Village Capital, women make up just 17 percent of executives at fintech startups, and less than 1 percent of fintech founders are Black.1

At the same time, estimates from the Financial Health Pulse2 indicate that over two-thirds of people living in America are financially unhealthy, of whom a disproportionate percentage are Black, Latinx, and/or women.3 As of August 2020, only 15 percent of Black people and 24 percent of Latinx people were financially healthy, compared with 39 percent of White people and 39 percent of Asian Americans. The gap in financial health between men and women is also notable, with 40 percent of men versus 28 percent of women financially healthy. As Table 1 shows, these disparities compound, making it even more challenging for people who identify across more than one of these dimensions.

For the promise of fintech to be realized, we need entrepreneurs with a deep understanding of the lives and livelihoods of vulnerable consumers and the persistent challenges getting in the way of their financial health. Additionally, we need to create a strong, enabling environment of financial services providers, investors, policymakers, and regulators who can help create pathways to scale for solutions that work.

Between August 2 and August 6, 2021, PwC surveyed 752 US executives including CFOs and finance leaders (17%), CHROs and human capital leaders (13%), tax leaders (14%), risk management leaders, including CROs, CAEs and CISOs (12%), COOs and operations leaders (12%), CIOs, CTOs and technology leaders (12%), CMOs and marketing leaders (11%) and corporate board directors (9%). Respondents were from public and private companies in six sectors: industrial products (28%), financial services (22%), consumer markets (21%), technology, media and telecom (12%), health industries (9%), and energy and power (6%). Seventy-two percent of respondents were from Fortune 1000 companies. The Pulse Survey is conducted on a periodic basis to track the changing sentiment and priorities of business executives.

The second round of a World Health Organization pulse survey reveals that over one year into the COVID-19 pandemic, substantial disruptions persist, with about 90% of countries still reporting one or more disruptions to essential health services, marking no substantial global change since the first survey conducted in the summer of 2020.

The purpose of the survey was to gain insights and perspectives on the impact of the COVID-19 pandemic on essential health services and how countries are adapting strategies to maintain essential services. This survey round follows up WHOs previous pulse surveys on continuity of essential health services distributed throughout quarters 2 and 3 of 2020, including: Pulse survey on continuity of essential health services during the COVID-19 pandemic; Rapid assessment on the impact of the COVID-19 pandemic on noncommunicable disease resources and services; Rapid assessment on the impact of COVID-19 on mental, neurological and substance use services; and Round 1 and Round 2 pulse surveys on immunization.

Measures of financial distress may also provide an indirect measure of household balance sheet strength, as accrued savings provide a buffer to fund spending and service debts. As shown in Figure 8, delinquencies dropped precipitously during 2020 when the first tranche of fiscal stimulus went out and stayed low through 2021.11,12 Likewise, payment rates on credit card balances rose and stayed elevated through 2021, consistent with conclusions of Adams and Bord (2020). Delinquency and payment rates have levelled off or shown signs of deterioration this year, but both measures remain in a healthier state than before the pandemic. These patterns are consistent with the gradual drawdown of excess savings, and they support our finding that household balance sheets in the bottom half of the distribution are still relatively healthy.

Adjusted EBITDA. Adjusted EBITDA is a Non-GAAP measure. We define Adjusted EBITDA as net income (loss), excluding (i) income (loss) from discontinued operations, net of income taxes, (ii) net income (loss) attributable to non-controlling interests, net of tax, (iii) provision for (benefit from) income taxes, (iv) income (loss) from equity method investments, (v) interest expense, (vi) other income (expense), net, (vii) depreciation and amortization, (viii) stock-based compensation expense, (ix) certain legal, tax, and regulatory reserve changes and settlements, (x) goodwill and asset impairments/loss on sale of assets, (xi) acquisition, financing and divestitures related expenses, (xii) restructuring and related charges and (xiii) other items not indicative of our ongoing operating performance, including COVID-19 response initiatives related payments for financial assistance to Drivers personally impacted by COVID-19, the cost of personal protective equipment distributed to Drivers, Driver reimbursement for their cost of purchasing personal protective equipment, the costs related to free rides and food deliveries to healthcare workers, seniors, and others in need as well as charitable donations. Our board and management find the exclusion of the impact of these COVID-19 response initiatives from Adjusted EBITDA to be useful because it allows us and our investors to assess the impact of these response initiatives on our results of operations. 041b061a72


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