Third Stimulus Check: Here’s How Americans Spent Their Stimulus Checks
Here’s how Americans spent their stimulus checks.
Here’s what you need to know.
Now that most Americans have received a third stimulus check, you may be wondering how people have spent their Economic Impact Payments. Cumulatively, Americans have received more than $850 billion of Economic Impact Payments from three different stimulus packages in response to the Covid-19 pandemic. According to new research, here’s how most Americans have spent their stimulus checks and how stimulus checks have impacted the economy.
How did Americans spend their stimulus checks?
The answer: it depends.
First stimulus check: Cares Act
For the first stimulus check, almost 75% used, or planned to use, their stimulus payments for household expenses. Why? The first stimulus check was mostly disbursed in April 2020 when the unemployment rate was 14.7% and there was greater uncertainty about the Covid-19 pandemic.
Second stimulus check and third stimulus checks
However, the spending patterns changed for the second and third stimulus checks. For example, approximately 20% spent or planned to spend their stimulus checks on essential expenses such as food and housing. Americans instead chose to use their Economic Impact Payments to save for retirement or pay off debt. According to the U.S. Census Bureau, here’s how the Americans spend their second stimulus check (Consolidation Appropriations Act) and third stimulus check (American Rescue Plan) compared to the first stimulus check:
- First Stimulus Check: Spend (74%), Save (14%), Pay Debt (11%)
- Second Stimulus Check: Spend (22%), Save (26%), Pay Debt (51%)
- Third Stimulus Check: Spend (19%), Save (32%), Pay Debt (49%)
How income level affected stimulus checks
The first, second and third stimulus checks reached an estimated 85% of households. Stimulus payments targeted lower income and middle income households, with a gradual decline for households earning more than $75,000 annually. The amount of an individual’s income impacted how they spent their stimulus payment. While all income levels were more likely to spend their first stimulus check, higher income individuals were more likely to save their stimulus check. This is particularly true in the second and third stimulus checks. For example, in comparison to spending on essential expenses, households that earned more than $150,000 annually were more likely to both save their stimulus check and use their stimulus check to pay off debt. Lower income and middle income households, according to the researchers, may have been less willing to save or pay off debt due to uncertainty regarding the Covid-19 pandemic.
Have stimulus checks helped the economy?
The research is inconclusive how much stimulus checks have helped the economy. That said, Economic Impact Payments “may have contributed to a rise in” personal income, consumer spending, personal savings and economic growth. The Congressional Budget Office estimates that the stimulus checks under the Cares Act increased economic output in the U.S. by 0.6%. In comparison, enhanced unemploymentt benefits boosted the economy by 1.1%, while the Payment Protection Program (PPP) led to an increase of 0.8%.
Here’s what a 4th stimulus check could look like
Will there be a 4th stimulus check? Most likely, no. There are many reasons why a 4th stimulus check is unlikely. For example, Biden doesn’t support a fourth stimulus check, and he is focused on passing his new infrastructure package. The new infrastructure package doesn’t include a fourth stimulus check, and it’s unlikely that Congress will add another stimulus check to this proposed legislation. However, that hasn’t stopped more than 80 members of Congress who want to give you $2,000 stimulus checks every month until the Covid-19 pandemic is over. Why? These legislators say that three, one-time stimulus checks aren’t enough for most Americans who are struggling in the wake of the Covid-19 pandemic. They say another stimulus check could keep 12 million people out of poverty. Despite their push, Biden doesn’t support recurring stimulus checks and there aren’t enough votes in Congress from Republicans or Democrats to pass $2,000 a month stimulus checks.