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Here's How Americans Are Spending Their Stimulus Payments

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Here's How Americans Are Spending Their Stimulus Payments

The U.S. government recently sent out its second round of stimulus payments worth up to $600 per qualified person. The primary purpose of the payments was to help those who are struggling to make ends meet during the pandemic, but stimulus spending can also serve as a much-needed shot in the arm for the economy.

Bank of America economist Michelle Meyer recently took a close look at the bank’s credit-card data to determine how Americans who received stimulus payments are spending their money.

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Stimulus Spending Bump: Most payments were distributed through the first week of January, so Meyer focused on any changes in spending behavior among those that received payments.

“Total card spending for stimulus recipients is up nearly 20% year-over-year average since Jan. 1, which is almost 4X the December average growth rate,” Meyer said Thursday.

The jump in spending was highest among lower-income households. Those households spent an average of nearly 40% more after receiving their payments than those that did not receive payments.

For investors wondering where all that stimulus money is flowing, Meyer said clothing, online electronics, general merchandise and home improvements saw the biggest jump in spending.

Winners And Losers: For the week ending Jan. 9, Bank of America reported online electronics spending was up 75% from a year ago. Other leading categories include furniture (+36%) and general merchandise (+30%). Spending categories that look the biggest year-over-year hits include entertainment (-76%), air travel (-68%) and transit (-31%).

A recent Benzinga sentiment survey also found that many Americans are investing their stimulus checks. Electric vehicle stocks like Tesla Inc (NASDAQ: TSLA) and Nio Inc - ADR (NYSE: NIO) were among the most popular investments. Coronavirus vaccine stocks like Moderna Inc (NASDAQ: MRNA) and Pfizer Inc (NYSE: PFE) were also among the most popular investments.

Benzinga’s Take: It’s good to see Americans can afford to spend the stimulus check on something other than bills and aren’t afraid to spend or invest that money. The more stimulus payments are spent rather than simply being saved, the more more positive impact the payments can have on the economy.

Photo by Karolina Grabowska from Pexels

 

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