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Household Spending Responses to the Economic Impact Payments of 2020: Evidence from the Consumer Expenditure Survey

Author

Listed:
  • Jonathan A. Parker
  • Jake Schild
  • Laura Erhard
  • David S. Johnson
Abstract
Using the Consumer Expenditure Survey and variation in amount, receipt, and timing of receipt of Economic Impact Payments (EIPs) authorized by the CARES Act, this paper estimates that people spent less of their EIPs in the few months following arrival than in similar previous policy episodes and than estimated by existing studies using other types of data. Accounting for volatility during the pandemic and comparing the consumer spending behavior of broadly similar households, people spent roughly 10 percent (standard error 3.4) of their EIPs on non-durable goods and services in the three months of arrival, with little evidence of additional spending in the subsequent three months or on durable goods. People who report mostly spending their EIPs spent 14.3% (3.7) of their EIPs compared to 5.9% (8.3) and -1.6% (5.0) for those who report mostly paying off debt and saving respectively. People with low liquid wealth and people receiving their EIPs on debit cards spent at higher rates: 21.7% (6.4) and 36.8% (24.6) respectively, with economically larger estimates for total spending.

Suggested Citation

  • Jonathan A. Parker & Jake Schild & Laura Erhard & David S. Johnson, 2021. "Household Spending Responses to the Economic Impact Payments of 2020: Evidence from the Consumer Expenditure Survey," Economic Working Papers 544, Bureau of Labor Statistics.
    • Handle: RePEc:bls:wpaper:544
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    References listed on IDEAS

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    Cited by:

    1. Vincent Fusaro & H. Luke Shaefer & Pinghui Wu, 2022. "Government Transfers and Consumer Spending among Households with Children during COVID-19," Working Papers 22-17, Federal Reserve Bank of Boston.
    2. Rishabh Aggarwal & Adrien Auclert & Matthew Rognlie & Ludwig Straub, 2023. "Excess Savings and Twin Deficits: The Transmission of Fiscal Stimulus in Open Economies," NBER Macroeconomics Annual, University of Chicago Press, vol. 37(1), pages 325-412.
    3. Bernard, René, 2022. "Mental Accounting and the Marginal Propensity to Consume," VfS Annual Conference 2022 (Basel): Big Data in Economics 264186, Verein für Socialpolitik / German Economic Association.
    4. Carter, Colin A. & Steinbach, Sandro & Zhuang, Xiting, 2022. "Global Container Trade Disruptions and U.S. Agricultural Exports," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322364, Agricultural and Applied Economics Association.
    5. Robin Greenwood & Toomas Laarits & Jeffrey Wurgler, 2022. "Stock Market Stimulus," NBER Working Papers 29827, National Bureau of Economic Research, Inc.
    6. Linchi Hsu & Alexander Henke, 2024. "Unemployment insurance generosity and intimate partner violence," Review of Economics of the Household, Springer, vol. 22(4), pages 1461-1481, December.
    7. Matthew Schaffer & Nimrod Segev, 2023. "Quantitative Easing, Bank Lending, and Aggregate Fluctuations," Bank of Israel Working Papers 2023.01, Bank of Israel.
    8. Jack Dunbar & Christopher J. Kurz & Geng Li & Maria D. Tito, 2024. "In the Driver's Seat: Pandemic Fiscal Stimulus and Light Vehicles," Finance and Economics Discussion Series 2024-013, Board of Governors of the Federal Reserve System (U.S.).
    9. Bernard, René, 2023. "Mental accounting and the marginal propensity to consume," Discussion Papers 13/2023, Deutsche Bundesbank.
    10. Krista Ruffini, 2023. "Does Unconditional Cash during Pregnancy Affect Infant Health?," Opportunity and Inclusive Growth Institute Working Papers 072, Federal Reserve Bank of Minneapolis.
    11. Francesca Bergamante & Marco Marucci, 2023. "Sostegno ai consumi: il profilo dei beneficiari di voucher, bonus e buoni spesa," ECONOMIA E SOCIET? REGIONALE, FrancoAngeli Editore, vol. 2023(1), pages 39-52.
    12. Ku, Inhoe & Ham, Sunyu & Moon, Heyjin, 2023. "Means-tested COVID-19 stimulus payment and consumer spending: Evidence from card transaction data in South Korea," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1359-1371.
    13. Goldfayn-Frank, Olga & Lewis, Vivien & Wehrhöfer, Nils, 2022. "Spending effects of child-related fiscal transfers," Discussion Papers 26/2022, Deutsche Bundesbank.

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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • G5 - Financial Economics - - Household Finance
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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