How Did Americans Spend Their Stimulus Money?

And is there a genuine need for more?

Jason Deane
Aug 6, 2020 · 8 min read
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Image by Elliot Alderson from Pixabay

Recently it has become clear that a second round of stimulus checks in the U.S. is now all but inevitable, as part of the ongoing economic rescue package required due to the COVID-19 pandemic.

It’s pointless to argue at this stage whether this “helicopter money” is a good or bad idea, because the fact is that the U.S. government, like so many of its counterparts in other countries, has little choice.

Everyone is printing money, and theoretically at least, this direct injection to the people who need it is an attempt to offset the Cantillon effect, the well-established observation that when new money is printed, institutions and the rich benefit from it first, or perhaps even exclusively.

But in any case, the die is cast, and the next round of checks should arrive at the homes of millions of Americans somewhere between August 24 at the earliest and the end of September at the latest, probably in amounts similar to the last round, that is, $1,200.

In an ideal world, people will take that money and spent it on goods and services within their own country, as this will stimulate the economy from the bottom up, especially if the providers of those goods and services are themselves American.

However, in a time when more mortgages are past due than at any time since 2011 according to data from U.S. property research firm Black Knight, it’s hard to imagine families going out for a new wardrobe or bigger TV if they can’t make the monthly mortgage payment.

If that’s the case, this means it’s far more likely they’ll simply use the stimulus check to keep a roof over their head than grab a rack of ribs at the local TGI Fridays.

And if that’s the case and it happens on a large enough scale, then the money intended for consumer spending will still end up going right back to the very same large institutions the process was intended to avoid in the first place.

It’ll probably be months, or even years, before we really know where the money ended up in the economy, but surveys have already been carried out that give us some clues as to where it might be.

And some of it makes for interesting reading.

From a personal perspective, I’ve always been fascinated with so-called “Helicopter Money,” described that way because it’s based on the image of physical cash being dropped from helicopters hovering over crowds of people.

Fortunately, U.S. policymakers have spared the population at large the indignity of fighting each other for dollar bills by instead sending it neatly and precisely to every qualifying household directly.

So, now that the distribution problem is solved, does the economic theory hold up? Do people, when suddenly receiving a windfall in difficult times, elect to spend it how the government wants?

Interestingly, this is not the first time this sort of direct stimulus has been tried. I remember, for example, reading about Australia’s version in 2009, where $42 billion(Australian) was used to send a one-off payment to households of around $900-$950 in an attempt to drive retail sales.

However, reports of whether this was successful or not appeared mixed, and definitely vary by partisan view. Also, coverage of the event on the global stage was surprisingly subdued.

It wasn’t until years later when I was working closely with one of my Australian employees, that I got a “first hand view” explanation.

In typical Australian style, it was delivered in a totally matter-of-fact, direct manner making heavy use of Australian Quotation Intonation — that way of speaking that is unique to the continent, where everything is pronounced as a question, with the voice going up at the end of every sentence.

“We were told we could have it as long as we didn’t use to pay off debt or go on foreign holidays” he said.

“So we used it to pay off debt and go on holiday!” he announced with a broad smile.

There was clearly more to this conversation which was long and detailed, but this line stuck in my mind and appeared to be a perfect summary of what actually occurred.

This was one of the most law-abiding, honest people I have ever met, even to this day, and even he couldn’t bring himself to use it as his government asked. And therein lies the problem with perfect economic theory — people.

So, would the American citizens fare any better than their Australian counterparts in this new global crisis?

On June 24, the U.S. Census Bureau released their Household Pulse Survey for June 11 to June 16, which included data on how Americans spent their stimulus checks. The survey was offered to a million individuals with a 7.3% total response, and then extrapolated across all 249 million households.

Broadly, they split the stimulus into three possible outcomes — spending, saving or paying off debt. The results initially looked encouraging, with 70.2% spending the money, 15.7% paying off debt and 14.1% planning to mostly save it.

However, in most cases, the check was not spent exclusively in these categories, and was often spread across elements of one or more.

Of those who mostly spent it, about 80% reported using it on food, with 77.9% putting it toward rent or mortgage payments, as well as utilities such as gas, electricity, cable, internet and cellphones. Remember, respondents can select more than one category.

Nearly three-fifths (58.2%) claimed they spent some or all of their checks on household supplies and personal care products, and around one-fifth (20.5%) reported spending the money on clothing.

Finally, a small percentage (8.1%) said they spent (or would spend) some or all of their stimulus payment on household goods like TVs, electronics, furniture, and appliances or on recreational goods like fitness equipment, toys and games.

Interestingly, households with incomes between $75,000 and $99,999 were more likely to use their stimulus payments to pay off debt or to add to savings, with over a third of adults in those households reporting that to be the case.

In contrast, 87.6% of adults in households with incomes of $25,000 or less planned to use their stimulus payments to meet expenses.

In theory then, a “significant” portion of the 70.2% that was spent, rather than being saved or used to pay down debt, went toward items that could stimulate the economy. Nevertheless, on the face of it, this would seem to be a substantial number.

But I remain unconvinced. Something isn’t right here.

When researching for this article, I was surprised to discover different interpretations of the report, and even different numbers being attributed in different ways.

My feeling is that this is largely down to incorrect presentation and explanation of the numbers, rather than incorrect data analysis. Further, the way “expenses” has been mixed in with items like “mortgage payments” is counter-intuitive. The bottom line is that there is not clarity here.

Whatever the reason, reports are conflicting or even directly contradictory in places, making an accurate assessment difficult. Consider these summaries from Forbes and the Census Bureau quoting different numbers for food purchase and debt repayment, for example.

It’s also true, as mentioned above, that it could be some time before we really know what happened, since a survey is really no more than a general indication of where people will actually spend the money anyway. The numbers, therefore, aren’t even that important when you apply that caveat.

My view, therefore, is to treat all these early indications as no more than the vaguest of suggestions at this point, and let the economic indicators tell us what the impact ended up being.

Even with the economic impact unclear, it should be remembered that this is only part of the objective. Whilst the U.S. administration would love to see the money being spent on American goods and services, the fact remains this is largely about ensuring the survival of the people first, rather than the prosperity of the country as whole.

Or at least there are those who argue that it should be — even at the risk of being denounced as “socialist” in America's famously fanatically capitalist culture. The fact it is called a “stimulus check” rather presupposes the reverse.

Framed in that context, it’s largely irrelevant where people spend the money they’re given. If they need to pay the finance company to keep their car right now, they should be able to do that without giving it a second thought. And they probably are.

The bottom line is that the money will go where people need it the most, as it always does. Calling it a “stimulus check” is unlikely to change that behavior. Survival comes first.

There is also one more factor that must be included to provide a complete picture of the financial landscape the country is dealing with. The fact is that even before this pandemic began, millions of Americans were already in precarious financial positions.

The 2019 Financial Health Network’s U.S. Financial Health Pulse report reveals some terrifying truths.

According to them, 17% of Americans, or 43 million people, are classed as “financially vulnerable,” meaning that they are already struggling with basic finances, another 29%, or 73 million, are “healthy” and have some sort of resilience to unexpected situations and the remaining 54%, or 135 million, are “coping.”

In short, close to 180 million Americans would be at risk, financially speaking, in any situation of financial shock. Worse, only 28% of the entire population have any savings at all (disproportionately held by the “resilient” category) and a significant number live hand-to-mouth or paycheck-to-paycheck.

Logic would therefore dictate that stimulus checks would almost exclusively be used to pay down enough debt to buy another month or two, put food on the table and keep a roof over people’s heads. Luxury or economically stimulating purchases seem extremely unlikely in that context.

Whatever the initial — and slightly confusing — data tells us about the first round of stimulus checks, and whatever the logic based on the the national picture appears to show, the indisputable fact is that Americans need it. And they need it right now.

But let’s not fool ourselves by believing that it’s a “stimulus check” to boost a fundamentally healthy economy.

It’s a “survival check” to prop up a struggling one.

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Disclosure: The author of this opinion piece has been heavily involved with bitcoin for several years and holds a substantial cryptocurrency portfolio, including bitcoin. He also has a mining operation running the SHA-256 algorithm based in Siberia and is a published author on the subject of promoting the understanding of cryptocurrency. Jason is an analyst at Quantum Economics.

Disclaimer: Investing in any asset class is risky. The above should not be taken as financial advice, nor construed as so. Always do your own research before investing or consult with a professional financial planner.

Quantum Economics

Analysis. Advisory. Money Management

Jason Deane

Written by

I blog on things I am passionate about: Bitcoin, writing, money, life’s crazy turns and being a dad. Lover of learning, family and cheese. (

Quantum Economics

Quantum Economics is a publication for all those who wish to gain a greater understanding of why markets move, what influences them, and how you can get ahead of it.

Jason Deane

Written by

I blog on things I am passionate about: Bitcoin, writing, money, life’s crazy turns and being a dad. Lover of learning, family and cheese. (

Quantum Economics

Quantum Economics is a publication for all those who wish to gain a greater understanding of why markets move, what influences them, and how you can get ahead of it.

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