The Bureau of Labor and Statistics recently released a report studying the receipt and use of stimulus payments in the time of the COVID-19 pandemic, digging into understanding how Americans who received federal stimulus from the CARES Act spent these funds.
This report was conducted by adding questions that focused on the receipt and use of Economic Impact Payments to the rapid response Household Pulse Survey.
Consider The Economic Environment: The CARES Act is not the first time Americans have been sent a stimulus check.
In 2008, the government approved sending checks to Americans.
With the housing market collapsing at that point, “many consumers reported using the stimulus payment to pay off debt rather than using it for spending,” BLS Research Economist, Jake Schild, Ph.D., said in an email to Benzinga.
Schild was part of the research team that produced the report on COVID-19 relief payments.
Low-Income Americans Hit Hardest: The survey showed how the lowest earners in the country continue to be affected the most by COVID-19. Of those in the lowest earnings bracket, 88% reported that they expected to receive a payment and 77% of those reported that they would be using that payment to cover expenses.
The BLS did note that a large percentage of low earners may not have even been aware they were eligible for the payment.
Spending Behavior: A majority of respondents (59%) reported they would use their stimulus payment to mostly pay for expenses. Respondents were then provided a list of possible expenditure categories, respondents reported they would be spending their payment on food (66%), followed by utilities and telecommunications (50%), and household supplies and personal care (47%).
Understanding the environment and situation evolving is important, Schild said.
"As their needs change, so too will their spending behaviors. Thus, how respondents reported using the first round of stimulus payments will not necessarily be an accurate predictor of how a second round of stimulus will be used.”
The report also found that of those receiving the stimulus, those in Generation X were more likely to use the stimulus for expenses, whereas older respondents were more likely to save the stimulus payment.
Second Wave Of Payments Ahead? Schild noted other research done, including a report by Bankrate.com, showing that the first round of payments was not enough to hold over Americans and a second stimulus is needed.
The economist also pointed out that grocery delivery services have seen huge increases in users, and more people are buying products online that they would have bought in-person prior to the pandemic. Further research will be important to see if these shopping behaviors adopted during these past few months continue, he said.