Consumer Finances Then and Now: The Great Recession vs. 2020

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The U.S. entered an economic recession in February 2020, ending a record-long 11-year period of economic expansion. Spurred by the economic constraints of the COVID-19 pandemic, the current recession is by some measures already worse than the Great Recession of 2008.

Recessions are determined by the National Bureau of Economic Research (NBER) and are characterized as a period of economic decline that includes slowed industrial production and an increase in the unemployment rate. Among the many lasting economic effects of a recession is the toll it can take on consumer finances. During the Great Recession, the Federal Reserve Bank of Chicago estimated there were some 3.8 million home foreclosures, as many consumers were simply unable to make mortgage payments due to lost income.

Today, consumers' financial stability remains a major concern. Many wonder if Americans will emerge from this crisis in the same state—or worse—than they did after the Great Recession.

Consumer Finances Then and Now

As part of our ongoing commitment to help consumers manage the impacts of COVID-19, Experian analyzed internal data to show what consumer finances looked like when they entered the Great Recession compared with how they looked at the onset of the current economic downturn. Our analysis is based on a nationally representative sample of Experian's main consumer credit data.

To see how consumer finances differed during our current recession and the Great Recession, we looked at debt and credit data from the first four months of each period.

For the Great Recession, we analyzed the change in consumer finances from December 2007—the beginning of that recession, according to NBER—to March 2008. To mirror the comparison for the current recession, we compared records from February 2020 to May 2020.

In 2008, U.S. consumers carried a higher average debt balance in the month prior to the recession's onset than they did in the month before this year's recession began, according to Experian data. Consumer delinquencies were also higher and average credit scores lower at the start of the Great Recession than they were coming into the current economic downturn.

In the first three months of 2020, consumers on average kept debt increases minimal, improved their average credit scores and decreased delinquencies across all debt. In 2008, consumers saw debt spike significantly, improved their scores by only two points and reduced delinquencies at a slower rate than 2020.

Average Credit Score Higher in 2020

Credit scores are one of many indicators reflecting consumers' financial health—specifically how they are managing debt.

The average VantageScore® in February 2020 was 681, or 13 points higher than the average score when the Great Recession began, according to Experian data. Additionally, within the first three months of our current economic downturn, consumers raised their scores by an average of 7 points. From December 2007 to March 2008, the average consumer VantageScore increased by 2 points.

Average Consumer VantageScore
Great RecessionCurrent Recession
December 2007March 2008February 2020May 2020

Source: Experian

Consumer Debt Spiked in Early 2008

The change in consumers' average debt totals during the first three months of each economic downturn reveals a stark contrast. In the first three months of the Great Recession, consumers increased their average total debt by $3,843, or 4%, whereas debt balances during the same period in 2020 grew by an average of just $195, or 0.2%.

Consumers carried more overall debt going into the recession in December 2007, with an average of $90,576 per person. In February 2020, consumers' total average debt was slightly lower, at $89,590.

Average Consumer Debt Total
Great RecessionCurrent Recession
December 2007March 2008February 2020May 2020

Source: Experian

Consumers Reduce Credit Utilization in Recessions' Early Days

Going into the Great Recession, the average credit utilization ratio (the percentage of available revolving credit in use) was 27%, compared with 29% in February 2020. Americans cut their utilization by 4% between December 2007 and March 2008—but during the first months of the current downturn, they reduced their utilization by a substantial 13%. This shows that while the economic downturn was gaining steam, consumers worked to pay down their credit card balances. A lower credit utilization ratio is better for credit scores; those with the highest credit scores commonly have overall utilization ratios in the low single digit percentages.

Average Consumer Utilization Ratio
Great RecessionCurrent Recession
December 2007March 2008February 2020May 2020

Source: Experian

Delinquencies Show Greater Drop in 2020

Overall, consumers had more instances of 30-day delinquencies (late payments) in December 2007 than they did at the onset of the current recession. This is in line with the overall economic environment at that time, as part of the Great Recession included a widespread struggle to keep up with rising interest and expensive mortgage loans.

Consumers also reduced their number of delinquencies at a higher rate in 2020 compared with the same period in 2008.

Change in Overall Average Consumer Delinquency
December 2007 to March 2008February 2020 to May 2020
Average number of 30-day delinquency occurrences-2% -7%

Source: Experian

Consumers May Be Better Poised for Current Financial Crisis

While it's impossible to predict how consumers will continue to manage the current economic downturn, the recession's early months indicate a focus on their personal finances.

Across nearly all indicators—including total debt, utilization, credit score and delinquency—consumers improved their debt and credit positions more in the first three months of the current recession than during the most recent downturn. In the case of total average debt, consumers in 2020 were able to limit the growth of their overall debt balance, while consumers during the early months of the Great Recession saw balances spike by 4%.

Much of this may be attributable to the passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act, a $2 trillion stimulus law that issued a one-time $1,200 payment to many Americans and widely expanded unemployment benefits.

Though the current recession's initial three months of consumer debt and credit data paint a positive picture of consumer finances, unemployment has spiked to historic highs in 2020. As income declines and stimulus aid continues to lapse, consumers' finances may change as people seek ways to cover their expenses.

As Americans continue to manage the effects of the pandemic, the data included in our analysis will continue to evolve. The information included here represents only a momentary snapshot of consumer finances. As time goes on—especially as certain economic stimulus and relief measures expire—these trends may change. We will continue to publish additional insights as newer data becomes available.

Note: The data attributes and sample sizes for this research may not exactly match other Experian analyses, and thus a slight variance in some statistics may exist.

Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.

FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.