COVID-19 Stimulus Payments Inspire Saving Over Spending

The U.S. government is sending another round of checks meant to stimulate economic activity during the coronavirus pandemic. How will Americans spend their stimulus checks?  In a collaboration with Maru/Blue Public Opinion, Refinitiv discovered how U.S. citizens plan to utilize this new round of funding.

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Q3 2020 hedge fund letters, conferences and more

COVID-19 Stimulus Payments Inspire Saving Over Spending

• How do Americans plan to spend their stimulus checks?
  • 44%, plan to save the money; 36% will pay off debts; 20% will spend the funds

Source: Maru/Blue Public Opinion Survey

• Increasing National Debt
  • The deficit and national debt have risen significantly due to the federal stimulus programs
    • End of 19Q4 the U.S. public debt-to-GDP ratio was 106.7% and increased to 127.3% at end of 20Q3
  • The Cares Act (pandemic-related costs and relief measures) have brough the U.S. to its highest public debt levels in more than 70 years

Source: Refinitiv Datastream

• • Although intended to fuel economic activity by consumers, a large portion of Americans are telling us they’ll be saving their stimulus checks followed by paying off debt
    • 1 in 5 Americans intend to spend stimulus checks
    • Refinitiv earnings forecasts suggests 21Q1 will be the first positive quarter in over a year as retailers will face easier YoY comparisons
      • Household Durables, Internet & Catalog Retail and Leisure products may even receive a boost from stimulus check spending
• Rising Personal Savings
  • Personal savings rates are up:
    • Beginning of 2020, personal savings rates were at 7.6%; April 2020, 33.7%; December 2020, 12.9%
    • Experienced similar personal savings activity during the global Great Recession (December 2007 - June 2009)
• Spending the Stimulus Check
  • Approximately 10 million Americans are unemployed and most likely to spend stimulus checks on basic living expenses, groceries, rent and mortgage

Source: Maru/Blue Public Opinion Survey

Sources: Data/Charts - “Refinitiv” and “Maru/Blue Public Opinion Survey” respectively

Commentary - “Jharonne Martis, Director of Consumer Research, Refinitiv”

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