Pennsylvania ranks among the states where people most need a loan because of the COVID-19 pandemic, a potentially troubling sign of deeper problems, according to a new analysis.
“This means that residents … have been severely affected financially by the pandemic, and are looking to take out loans to make ends meet,” WalletHub analyst Jill Gonzalez said in an email.
“The quick remedy for the loan necessity would be more financial support from the government,” Gonzalez added. “In the long run, a reboot of the economy and decrease in unemployment are the main factors that can keep people from incurring more debt in order to stay afloat.”
Overall, the Keystone State ranked No. 4, higher than neighbors West Virginia (No. 5), Maryland (No. 16), New Jersey (No. 17), Ohio (No. 19) and Delaware (No. 34). New York topped the list, followed by Virginia and Washington.
To compile its rankings, WalletHub looked at internal credit report data and Google search data for a trio of loan-related terms in all 50 states and the District of Columbia. Pennsylvania ranked No. 7 for searches on payday loans and No. 13 for home equity loan searches.
“Greater interest in getting a loan can also mean that the state might experience a deeper recession,” Gonzalez said.
Leaders in states such as Pennsylvania “need to focus on supporting their residents, and reopening their economies as soon as possible,” Gonzalez added. “To do that, they first need to make sure there are efficient social distancing and hygiene measures in place, so that people can feel safe when going outside.”
In a Q&A with WalletHub, Jesus M. Salas, and associate professor of finance at the Lehigh University School of Business, said the “economy should reopen as soon as it is practically feasible.”
“The virus will re-surge regardless of when the economy reopens. The government should check hospital capacity as it reopens,” Salas said. “The governments simply do not have money now (given high unemployment). Until the economy reopens, it does not make sense for the government to simply borrow to make sure everybody pays all their bills.”
To help reopen the economy, Pennsylvania lawmakers have passed various measures.
Lawmakers recently signed off on House Bill 2513, legislation proponents say eases the restrictions bar and restaurant owners face amid the COVID-19 pandemic. The bill is awaiting action from Gov. Tom Wolf.
Wolf vetoed another measure, House Bill 2787, giving local jurisdictions more control to decide whether to resume high school sports and allow spectators to attend games.
