The latest stimulus check had a major economic impact – Community News
Stimulus Check

The latest stimulus check had a major economic impact

In response to the COVID-19 pandemic, lawmakers have previously authorized the payment of two coronavirus stimulus checks.

One of these direct payments was deposited into Americans’ bank accounts through the CARES Act, which passed in late March 2020. The most recent was distributed in late December and early January. Now the Biden administration is working with Democrats to pass another coronavirus relief bill that would net the largest check yet: $1,400 per adult and eligible dependent.

As lawmakers consider adopting a third direct payment, it’s worth looking at the impact of the most recent, especially as it had a profoundly positive effect on the economy.

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Here’s how the $600 coronavirus stimulus checks impacted consumer spending

According to data from the US Census Bureau, there was an increase in retail shopping in January. This is a marked change from months of declining sales. Economists had forecast sales would rise slightly, rising about 1.2%. But consumers actually spent much more than predicted. Retail sales even rose 5.3% in January to $568.2 billion.

The increase in consumer demand driving retail sales was likely driven by two main factors. The first was optimism about the future as news of a vaccine broke and people started imagining a return to normalcy.

However, the second and most likely reason for the increase was the arrival of the $600 incentive payments. They put more money into people’s wallets, which in turn could spend them.

The increase in retail sales was not solely due to specific sectors, although some sectors outperformed others as people continue to stay at home more and take steps to improve their living conditions. For example, there was a 14.7% increase in electronics sales in January and a 12% increase in furniture sales, for example. But people went out more and spent money at some businesses that had been hit particularly hard by the pandemic. Restaurants and bars even saw a monthly turnover increase of 6.9%.

However, the data still shows that many consumers are increasingly shopping online, mainly because they are increasing their spending thanks to stimulus funds. In January, there was an 11% monthly increase in e-commerce sales. And online retailers saw the largest year-over-year increase in spending from any industry, with sales up 28.7% since January 2020.

Increased retail consumer spending is usually all good news, but retail sales are still down 3% compared to January 2020. In addition, sales in bars and restaurants, as well as clothing and accessories, have still fallen dramatically year over year. . So there is certainly room for economic improvement. As the next stimulus check is likely to be even bigger than the previous one, it’s possible that the third direct COVID-19 payment will have an even greater impact on boosting retail sales and improving economic conditions.

A large stimulus payment coupled with a growing number of Americans getting vaccinated could be very good news – especially for companies that have been dealing with the economic fallout from the coronavirus, as everyone waits for life to return to something akin to normal .