Third Stimulus: How Americans Are Spending Payments

With a third stimulus payment officially on the way, it is essential to look back at how many decided to pay the first stimulus payments received. Americans have received two checks to this point, one in May 2020 and another shortly before the end of the year for $600. The third payment, totaling $1,400, should hit the mail sooner than later. When it does, people will waste little time putting it back into circulation within the economy.

The first $1,200 stimulus was used to "splurge" at Walmart, Target, Best Buy and other major retailers. Despite the coronavirus pandemic, people still found a way to shop and keep some businesses afloat. TVs, electronics, games, equipment and other items to be used while quarantined were big sellers. Clothing was another, while others paid bills or credit card payments. Folks found some interesting ways to make it work for them, but the past shows something else should replicate this time around.

According to Forbes, the majority of Americans used their stimulus checks to pay off looming debt or put it away in a savings account. A survey sent out by the National Bureau of Economic Research shows that only 15 percent of CARES Act stimulus payments were spent. 33 percent said they placed the payment in their savings, while over half at 52 percent used it to pay down debt.

From there, breaking it down into chunks of the money shows that those who spent only used 40 percent of their money on average. Savings landed at an average of 30 percent and another 30 percent was put on debt. Those who spent the money used it on necessities like toiletries and beauty products, food, and other products that could prove useful during a pandemic.

The survey covered around 11,000 people, including the unemployed. As Forbes notes, two-thirds of unemployed recipients of stimulus money said it had "no impact on their job search." And 20 percent of unemployed recipients said the payment had them work harder to find a job.

While the idea sounds fiscally sound for those receiving checks, their decision to save and spend wisely defeats the purpose of the "stimulus" portion of the funding. Georgetown University Professor Rohan Williamson tells Forbes that the choice not to spend during the pandemic is unique. But it also comes from a place of fear.

"The ability to spend [your payment] to regenerate the economy is limited," Williamson says, noting the lack of public outings. "Once the pandemic fear is taken care of and Americans feel safe to go out, they will."


This is common sense thinking, but it also ignores the actions of elected leaders throughout the United States. The lack of a federal response from top down has left America feeling the worst of the pandemic and losing close to 200,000 people with over 5 million infections. The unknown quality of the U.S. course in combating the disease creates more fear, possibly keeping the economy chained up.

"Customers are being responsible and careful with their stimulus money and their resources," Wells Fargo's Mary Mack told Forbes. "They're preparing for the unknown."