Companies see an opportunity with more relief money headed to consumers
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Over the past few days, some people have started to receive their $1,400 relief payments, and Wednesday morning, banks and credit unions are receiving the government funds they need to distribute payments to even more people — tens of millions, according to the American Bankers Association.
The Committee for a Responsible Federal Budget estimates that this latest round of direct payments adds up to more than $400 billion. And retailers are competing to receive some of this as people spend.
Consumers are likely to spend this latest round of relief payments quickly, said Matt Kleinschmit, CEO of the market research consultancy Reach3 Insights. On people’s shopping lists are “things like groceries, household essentials, clothing, footwear, outerwear, etc. So it really is a competition,” Kleinschmit said.
And it’s a competition that’s playing out online where consumers have been shopping throughout the pandemic, said Sucharita Kodali at Forrester Research.
“That’s where they expect to see any deals or offers that are there,” Kodali said.
And throughout the pandemic, many brands have been focusing on selling products directly to consumers, said marketing professor Barbara Kahn at the University of Pennsylvania’s Wharton School. That’s given those companies a lot of consumer shopping data.
“They know what their purchase histories are, they know what their preferences are, and it’s much easier to get tailored and personalized messaging,” Kahn said.
She said much of that messaging is likely to come from apparel, entertainment and other industries that have struggled throughout the pandemic.
COVID-19 Economy FAQs
What do I need to know about tax season this year?
Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.
How long will it be until the economy is back to normal?
It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.
How are those COVID relief payments affecting consumers?
Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.
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