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COVID-19

How we spent our relief checks

Nancy Marshall-Genzer May 20, 2020
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People shop at a Los Angeles grocery store. Americans spent their stimulus checks on the essentials, like rent and groceries. Mario Tama/Getty Images
COVID-19

How we spent our relief checks

Nancy Marshall-Genzer May 20, 2020
Heard on:
People shop at a Los Angeles grocery store. Americans spent their stimulus checks on the essentials, like rent and groceries. Mario Tama/Getty Images
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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

So what’s up with “Zoom fatigue”?

It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.

How are Americans spending their money these days?

Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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