- Following the $2 trillion stimulus package passed in March, democrats are pushing for an even bigger stimulus package to boost the economy.
- A recent study found that most Americans used their $1,200 payout on essential items like rent, food, and utilities.
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With the coronavirus bringing the U.S. economy to a standstill, President Trump in March approved a sweeping $2 trillion stimulus package that included $1,200 payouts to eligible Americans. The IRS began issuing said payments via direct deposit last month and stopped accepting new requests on May 13. If you’re eligible for a payout but didn’t provide the IRS with your banking information, you’ll likely receive a check in the mail sometime before July.
Now that we’re about a month removed from the first round of direct deposits, it’s becoming clear that a new stimulus package will be necessary to help Americans pay for basic necessities. Unemployment remains at a historically high level and a new study found that the majority of Americans spent their $1,200 payout on things like rent, utilities, and food.
A research paper on the matter from University of Chicago economists reads:
Given the size of the 2020 stimulus checks, we might have expected large impacts on categories like automobile spending, electronics, appliances, and home furnishings. Instead it seems that individuals are catching up with rent and bill payments as well as engaging in spending on food, personal care, and non-durables.
Across all categories, we find statistically significant increases in spending following the receipt of a stimulus check. These responses are widely distributed across categories, with cumulative spending on food, household, non-durables, and payments each increasing by approximately $50-$75 in the three days following receipt of a check.
Put simply, Americans aren’t spending their $1,200 payout on luxury items like new cars, but are rather using it for essentials. The study further found that most households spent upwards of $400 within the first 10 days of receiving payment. This underscores the need for a new stimulus package, though how that might manifest remains something of a mystery at this point.
As we reported earlier, the White House is currently entertaining a number of ideas, including a $5,000 payout for Americans who opt to delay their social security benefits. And though many Democratic leaders are championing a massive new stimulus package, President Trump recently said that he’s in “no rush” to pass a new relief bill.
To this point, The Washington Post reported earlier today:
House Democrats moved toward passage Friday of a $3 trillion tax cut and spending bill that they have said would aim to address economic fallout from the novel coronavirus outbreak, directing huge sums of money into all corners of the economy.
But the White House and Senate Republicans have said they will immediately cast the bill aside, leaving uncertain what steps policymakers might take as the economy continues to face severe strains.
In a press release on the matter, Nancy Pelosi earlier today said that Congress “must honor its responsibility to the American people to lessen the blow of the coronavirus by making the serious investment of The Heroes Act to our state, local, tribal and territorial governments.” Hopefully Republicans and Democrats can put their squabbles aside and actually reach some sort of compromise sooner rather than later.