Question of the Day: The federal government mailed out $1,200 stimulus checks this spring. Rank order from highest to lowest how people used the stimulus: Purchased stuff, paid down debt or saved it?
Answer: 41% of stimulus checks went to purchase stuff, 31% to repay debts and 27% was saved
Using data from a recent survey of 12,000 Americans conducted by Nielsen, a market-research firm, the authors found that just 42% of the money was spent. Another 27% was saved. The remaining 31% was used to repay debts.
https://www.economist.com/graphic-detail/2020/09/02/how-did-americans-use-their-coronavirus-stimulus-cheques
Questions:
- What do you notice about the relationship between household income and spending. on food, health, beauty and household items?
- What do you think people saved such a high percentage of their stimulus checks?
- Which expenses in the chart above would you consider needs vs. wants?
Behind the numbers (the Economist):
But a new working paper by three economists—Olivier Coibion, Yuriy Gorodnichenko and Michael Weber—suggests that Americans did not use the payments quite as Uncle Sam had hoped. Using data from a recent survey of 12,000 Americans conducted by Nielsen, a market-research firm, the authors found that just 42% of the money was spent. Another 27% was saved. The remaining 31% was used to repay debts.
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About the Author
Tim Ranzetta
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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