Over the weekend, the Senate passed a revised version of the $1.9 trillion COVID-19 relief package, sending it back to the House for a final vote before it reaches President Joe Biden’s desk to be signed into law. That vote is expected to take place by Wednesday morning, and if the president moves quickly, the first $1,400 stimulus checks could start being deposited into the bank accounts of eligible Americans before the end of next week.
Regardless of when the checks actually arrive, most Americans will probably do the same thing with their money — leave it alone. Harvard researchers running the Opportunity Insights project (via Yahoo Finance) estimate households with income over $78,000 will only spend 7% of the $1,400 direct payments. Lower-income households will spend up to 21%, while middle-income households will spend between 15% and 23% of the money.
The most interesting data from Opportunity Insights revolves around spending trends during specific stretches of the pandemic. As Yahoo reports, spending by lower-income Americans rebounded significantly after each of the previous two rounds of stimulus checks were sent out. Middle-income spending went up as well, though not by quite as much, while spending by high-income Americans hardly budget. Unsurprisingly, those who were struggling throughout the pandemic had more pressing concerns to address when they received their checks.
“The recession has ended for high-wage Americans,” Michael Stepner, a fellow at the Opportunity Insights project and incoming assistant professor at the University of Toronto. “For lower-income Americans, the employment recovery has stalled and many people have been out of work continually. Other people are cycling in and out of the labor force. There are certainly lots of low-income folks who need help, plus some in the middle.”
Data from the Bureau of Economic Analysis seems to back up these assertions. Last March, total household savings amounted to $2.1 trillion (12.9% of disposable income). That number fluctuated throughout the year, but is now sitting at $3.9 trillion, which is the highest it’s been since May. Americans have more money saved, but they aren’t spending it, likely because they are out of work, they are not making as much as they were before the pandemic, or because there simply isn’t as much to spend money on, with indoor dining, entertainment, and travel still limited.
Not everyone who received a $600 stimulus check will receive relief this time around, as the rules for eligibility were altered by the Senate. This time around, the full $1,400 will still be delivered to individuals who earned up to $75,000 and couples that earned up to $150,000, but the checks phase out much more quickly. Individuals making more than $80,000 and couples making more than $160,000 won’t get a check, which is why deciding when to file your taxes is so important this year. Decide soon, though, because the bill could become law within hours.