A recent report shows that of American households that received the last stimulus check for $ 1,400, only 19% spent the money immediately, as opposed to saving the funds or paying off existing debts.
The report, written by the Peter G. Peterson Foundation, “a non-partisan organization dedicated to tackling the long-term fiscal challenges of the United States to secure a better economic future,” details how American households spent or kept their three stimulus checks that have been distributed. as part of federal coronavirus relief programs.
“The first round of funds was mainly disbursed in April of last year, when the unemployment rate was at its highest (14.7 percent), and as a result, many households used this money to pay their bills. expenses, ”the report says. “Almost three-quarters of American households have used … these upfront payments of $ 1,200 primarily for expenses rather than saving them or using them to pay off existing debt.”
But the “spending pattern” changed during the second and third stimulus payments. Households that reported spending their stimulus payments on “expenses such as food and rent” fell from 74% of households in the first round of checks funded by the CARES law to 22% of households in the first round. second set of checks funded by the Consolidated Appropriations Act. . That figure fell to 19% of households in the third round of $ 1,400 payments.
“These spending patterns were even more pronounced based on income level,” the report says. “While all households were more likely to have spent the first round of payments, higher income families were more likely to have saved money – a trend that was more noticeable for the second and third rounds of payments. .
Analysts say some households, including low- and middle-income families, may have been more reluctant to spend second and third rounds of payments immediately due to the uncertainty of the pandemic, preferring to make the funds last as long as possible.
While the report says it’s still unclear exactly what impact the stimulus payments have had and will continue to have on the U.S. economy, it notes that “the enactment of each payment cycle has coincided with a significant increase. personal income, as well as consumer spending, that month. “
The latest stimulus checks came as part of the Biden administration’s $ 1.9 trillion stimulus package passed by Congress in March. In addition to stimulus checks, Biden’s American rescue plan also extended pandemic unemployment assistance and pandemic emergency compensation in the event of a pandemic.
Newsweek contacted the White House for comment. This story will be updated with any response.