There’s new research on how we’re spending those $1,200 direct payments from the federal government. Turns out, we’re spending the money much differently from how we did when the government sent out relief checks in 2001 and 2008. And that may not be a good thing.
This time around, people are using their direct payments to keep a roof over their head or food on the table. Economists at four universities studied the spending habits of about 1,600 middle- and low-income consumers who got relief checks. Columbia University economist Michaela Pagel is a coauthor of the study.
“We see a lot of spending on credit card payments, rent payments, mortgages,” Pagel said.
Also food, and of course toilet paper, at the grocery store. Compare that to 2001 and 2008, when consumers used the government payments to splurge on a new car or dishwasher. Of course, shopping for that kind of thing is difficult during a lockdown. Frank Nothaft is chief economist at CoreLogic.
“You can do some online shopping, but you still have to see the cars and see the appliances — see if it meets your needs,” Nothaft said.
But another study coauthor, Northwestern University economist Scott Baker, said they also looked at how fast consumers spent the government payments. Baker says in 2001 and 2008, it took them about six months. And those checks were less than $1,000 for an individual. So far this time? For the people in this study? The $1,200 payments were gone in one to two weeks.
“And so it seems like people were really anxious to get that money and started spending it the day it entered their bank account,” Baker said.
He added that these consumers may have lost their jobs suddenly. So splurging on anything right now is out of the question.
COVID-19 Economy FAQs
What’s going on with extra COVID-19 unemployment benefits?
The latest: President Donald Trump signed an executive action directing $400 extra a week in unemployment benefits. But will that aid actually reach people? It’s still unclear. Trump directed federal agencies to send $300 dollars in weekly aid, taken from the federal disaster relief fund, and called on states to provide an additional $100. But states’ budgets are stretched thin as it is.
What’s the latest on evictions?
For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.
Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?
Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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