Only 19% Spent Their $1,400 Stimulus Check, Most Paid Off Debt or Saved the Funds

A recent report shows that out of the American households that received the latest stimulus check of $1400, only 19 percent spent the money right away, as opposed to saving the funds or paying off existing debts.

The report, written by the Peter G. Peterson Foundation, "a non-partisan organization dedicated to addressing America's long-term fiscal challenges to ensure a better economic future," details how American households spent or saved their three stimulus checks that have been given out so far as part of federal coronavirus relief packages.

"The first round of funds was mostly disbursed in April of last year, when the unemployment rate was at its highest (14.7 percent), and therefore many households used the money to pay for expenses," the report said. "Nearly three-quarters of U.S. households used... those initial $1,200 payments primarily for expenses as opposed to saving them or using them to pay off existing debt."

Stimulus check
A recent report from the Peter G. Peterson foundation shows that only 19% of Americans who received a $1400 stimulus check spent the money, while the rest paid off existing debt of saved the funds. Here is a stock image of an America stimulus check from the United States Treasury. : Evgenia Parajanian/Getty

But the "spending pattern" shifted over the second and third stimulus payments. Households who said they spent their stimulus payments on "expenses like food and rent" went from 74 percent of households in the first round of checks funded by the CARES Act to 22 percent of households in the second round of checks funded by the Consolidated Appropriations Act. That figure dropped to 19 percent of households in the third round of $1,400 payments.

"Those spending patterns were even more pronounced by income level," the report said. "While all households were more likely to have spent the first round of payments, higher-income families were more likely to have saved the money—a trend that was more noticeable for the second and third round of payments.

Analysts indicate that some households, including lower- and middle-income families, may have been more reluctant to immediately spend the second and third round of payments due to the uncertainty of the pandemic, preferring to make the funds last as long as possible instead.

Though the report states it is still unclear precisely what impact the stimulus payments have had and will continue to have on the American economy, it noted that "the enactment of each round of payments coincided with a significant boost to personal income, as well as consumer spending, in that month."

The latest stimulus checks came as part of the Biden Administration's $1.9 trillion stimulus package passed by Congress in March. In addition to the stimulus checks, Biden's American Rescue Plan also extended the CARES Act's Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation.

Newsweek reached out to the White House for comment. This story will be updated with any response.