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September 15, 2020
In response to the COVID-19 crisis, the U.S. government approved a $2.2 trillion package last spring to stimulate the economy. Under this act, the government sent checks for $1,200, plus $500 per dependent child, to most Americans who fit the criteria. A new report by the National Bureau of Economic Research (NBER) aims to uncover how recipients spent that money, and we're sharing the highlights so business owners can see if any of the cash went into their industry.
Background: Amidst the rising spread of COVID-19 and the pervasive imposition of lockdowns in March 2020, the U.S. federal government passed the CARES (Coronavirus Aid, Relief, and Economic Security) Act on March 27, 2020. This stimulus package allocated $2.2 trillion, part of which went toward sending out stimulus checks. Those with annual incomes under $75,000 received either $1,200 (for single tax filers) or $2,400 (for joint filers) stimulus payments with an additional $500 for each minor dependent. Couples who filed jointly and made less than $150,000 got a one-time $2,400 check (plus another $500 per child).
A recent report by the NBER published in August 2020 reveals how one-time transfers to individuals from the CARES Act affected consumers’ spending and investment patterns. This survey was conducted on individuals participating in the Nielsen Homescan panel, which included 80,000-90,000 individuals who tracked their purchases daily. Following are the major findings from the report.
Asked during the survey how they had received their payments from the CARES Act, 80 percent of respondents told NBER they had gotten the money via direct deposit, while the remainder received checks. Some general patterns were observed among stimulus payment recipients from the survey, as follows.
The report found that the stimulus package was a good initiative by the U.S. government, but was not able to stimulate the economy as expected due to the following reasons:
To read the entire report, visit the NBER website.
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