How did Americans use money from the CARES Act?
Sarah Tew/CNETWith 12 days to go until the Nov. 3 election, Democratic and Trump administration negotiators continue to cobble together a deal on another economic stimulus package that would provide more financial aid for individuals and businesses, including a second stimulus check.
Based on several new studies, the direct aid included in March's CARES Act, in the form of stimulus checks for up to $1,200 per person (with more money for dependents) and $600 a week in enhanced unemployment benefits, had a substantial impact on helping Americans pay for essentials. And a second round of payments could have a similarly meaningful effect.
A September report from the Economic Policy Institute found that the stimulus checks and enhanced unemployment benefits together helped keep 13.2 million Americans out of poverty through June. And the number of first-time unemployment claims have hovered above 800,000 a week since March, indicating continued job loss as a result of the ongoing coronavirus pandemic.
A new survey from the Federal Reserve Bank of New York asked recipients of the first stimulus check how they would use a second direct economic payment. Here are their answers, along with how those who were eligible spent their relief money from the first around of payments.
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How would people use a second stimulus check?
A study published Oct. 13 from the Federal Reserve Bank of New York asked respondents from 1,300 households how they would use the money from a second check, if one were approved. This was their response:
- 45% of the stimulus payment would be saved.
- 31% of the money would used to pay down debt.
- 14% of the funds would be used on essentials.
- 7% of the money would go to nonessentials.
- 4% would be donated.
How did people use the first round of stimulus checks?
The New York Fed asked the same 1,300 household how many received the first direct payment (89%) and how they used their stimulus money. The survey, which included 1,300 households, found that the median payment per household was $2,400 (here's how that's calculated).
According to the findings:
- 36% of stimulus payments were saved.
- 35% of the money was used to pay down debt.
- 18% of the funds were used for essential spending, such as necessary daily living expenses.
- 8% used for nonessential spending, such as hobbies, leisure, vacation, and other items respondents do not need.
- 3% of the funds were donated.
The New York Fed suggested that only 30% of funds were spent, grouping together essential spending, nonessential spending and donations. This might have been out of concern over the length of the pandemic, the authors of the study suggested, or perhaps also the effect of COVID-19 on the economy and restrictions on in-person shopping. Those concerns may have resulted in more saving rather than spending.
How did people use their enhanced unemployment benefits?
Two more surveys looked at enhanced unemployment benefits: A second survey by the New York Fed asked those who received enhanced unemployment benefits how they used the money and another survey, from the JPMorgan Chase Institute, looked at what recipients of the enhanced unemployment benefits did with the funds.
How people used enhanced unemployment benefits
| How the money was used | How spending and savings changed |
|---|---|
| 49% used to pay down debts | Spending increased by 22% after receiving unemployment benefits |
| 24% used on essential spending | Spending declined by 14% in August after supplement expired |
| 23% of the funds were saved | Savings doubled between March and July |
| 4% on nonessential spending | Two-thirds of the accumulated savings were then spent in August alone |
| 1% donated |
For more information, here's what you need to know about unemployment during the pandemic, what is happening with the $300 unemployment benefit President Donald Trump authorized earlier this year and how to find out if you might qualify for a second stimulus check.
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Here's how Americans would use a second stimulus check, according to a survey - CNET
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