A new working paper breaks down how Americans spent their CARES Act stimulus checks. Using data from a survey of 12,000 Americans conducted by Nielsen, economists Olivier Coibion, Yuriy Gorodnichenko and Michael Weber found that 42% of the money was spent, 27% was saved and the remaining 31% was used toward paying debts. Additionally, 30% of Americans spent their entire stimulus check, while 40% didn’t spend any of the money.
The fact that not all the money was spent on purchases might dismay Congress, who passed the $2.2 trillion CARES Act in March with the intention of boosting the economy during the coronavirus pandemic. In total, the IRS made 159 million payments worth $265 billion. Taxpayers bringing in less than $99,000 a year ($198,000 for couples) received checks or wire deposits for up to $1200, and an additional $500 for each child.
Households at lower income levels tended to spend the money on bulk food and other essentials. Bigger households also spent more. But contrary to what one would expect, people who said they didn’t have a month’s income on hand to cover an unexpected bill were no more likely to spend their stimulus money. The findings in this study could affect how Congress approaches a potential second stimulus package. As The Economist noted, both Republicans and Democrats could find support for their argument here. Republicans will highlight the fact that those who received the most money spent the least. Meanwhile, Democrats will underscore that 21% of recipients said getting the stimulus motivated them to search harder for work.
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