Stimulus Checks: How People Have Been Spending That First Payment

It's been seven months since Congress and the White House passed the CARES Act. Under the CARES Act, eligible Americans were entitled to a one-time check worth $1,200 (and an additional $500 per dependent). So, how have Americans been utilizing those checks?

According to Yahoo! Finance, many Americans put their stimulus money away and have been recently drawing from those savings. To obtain this information, the New York Fed surveyed 1,200 households in September and asked them what they did with their stimulus checks. Of all of the stimulus money that has been sent out thus far, 29% of it was spent, 35% was used to pay debts, and 36% was put away in savings. These figures are slightly different from the survey that the New York Fed conducted in August. When they did the survey in August and asked consumers how they utilized their stimulus checks, 24% of it was spent, 31% was used to pay debts, and 45% was saved.

Because many Americans have been saving their stimulus checks, there could be an adverse effect on the economy. "The stock of savings accumulated since March suggests substantial upside risk to the economy, "University of Oregon professor Tim Duy wrote in response to the New York Fed's findings. "The possibility of a fiscal package after the election is another upside risk to the economy." Duy added that the next round of stimulus checks — if Congress can agree on another proposal — may need to be different from before if lawmakers want to give a boost to the economy. The professor said, "From a public policy perspective, the still likely extended period of high unemployment argues strongly for additional fiscal support, but if much of the rebates and UI payments are being saved, we should be considering more targeted support or aid that we know will be entirely spent (aid to state and local governments)."

As of right now, Democrats and Republicans have still been unable to agree on another stimulus package. Over the past several months, the two sides have been negotiating on another package without success. One of the main points of contention between Democrats and Republicans ties back to the total amount for the package, as Democrats are asking for more funds than their political counterparts. Given that many lawmakers are currently focused on the upcoming presidential election, which falls on Nov. 3, it's unclear whether they will be able to come to an agreement on another stimulus proposal before that date.