Under the CARES Act, 160 million people in America received economic aid in the form of stimulus checks. It involved a $300 billion cash injection. But how did Americans spend this money? And will there be a stimulus check round 2 after all?
CARES Act: Great Economic Aid For Americans
President Trump passed the CARES Act back on March 27th. It provided $2.2 trillion as the coronavirus economic relief package to American public. The global pandemic was hard on small businesses and individuals and the first round of stimulus checks, sent out to middle to low income individuals and households acted as a support staff for Americans through the terrible economic crisis.
Under that package, a $1200 stimulus check was provided to eligible people. An additional $500 was provided for child care support. The signature of the President appeared on each of the stimulus checks that were sent out under the CARES Act package. The President wished that his name was not added later on while making statements but his signature on 160,000,000 stimulus checks surely brought a lot of goodwill to him.
However, the nation now anxiously waits for an update on the stimulus check round 2. More than two months have passed since the official end date of the first stimulus package, but there is still no deal on the second round that Americans need so urgently.
Now, let us get into how the first round of stimulus checks were spent by Americans.
Spending Pattern Of The First Round Of Stimulus Check
A recent study carried out by the Federal Research Bank of New York delves into the pattern of spending of the stimulus checks round 1 by Americans. The most interesting find was that a majority of Americans used that money to save up rather than spend it. 89% of their surveyed households who chose to save up had received a median of $2400 as stimulus checks.
The study surveyed about 1408 people and among them, about 36.4% Americans said that they saved the amount received as government economic aid. About 34.5% people said that it was a great help as they could pay off long, outstanding debts with that amount.
The worsening condition of America, increasing unemployment rates and the uncertainty regarding the stimulus check round 2 made people save up the money to be used in the downturn. The people who had suffered the earliest blow in February with income cuts and layoffs showed a greater tendency to save up money or pay off debts.
Additionally, 18.2% Americans spent the stimulus check on essentials and only 7.7% on non-essential products during the lockdown. Even within this the survey results show that people under the age of 40 spent the most on non-essentials during the crisis. Non-whites spent far less on non-essentials than others. The poorer and unemployed section used this money on bare essentials and continue to do so with no guarantee of a stimulus check round 2.