Stimulus Check Update: Here's How Americans Spent the Third Round of Stimulus Money

by Angelica Leicht | Updated July 25, 2021 - First published on May 19, 2021

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If you've been wondering how other families spent their money from the last round of stimulus checks, we have answers -- and the data may surprise you.

As the $1,400 payments for the third round of stimulus checks are wrapping up, millions of Americans are still waiting -- and hoping -- for good news regarding a fourth round of stimulus payments. The IRS is continuing to send out checks and plus-up payments for the latest round of stimulus funds, but there is still a need for more federal money to help fill empty bank accounts caused by the pandemic.

Whether or not that will actually happen remains to be seen. As of right now, though, it's looking pretty unlikely -- unless something dramatically changes with lawmakers' attitudes toward a fourth round of stimulus checks. President Joe Biden has yet to propose a fourth round of stimulus checks to Congress, and while some Democratic lawmakers are pushing for another round of stimulus money, no real traction has been gained.

As we wait for more news on what the federal government is planning to do to get the economy back on track with the upcoming stimulus bills, more information is emerging on spending trends from the first three rounds of stimulus checks. If you've wondered how other families spent their stimulus money from the latest round of stimulus checks, we have the answers below -- and the trends from lower-, middle-, and higher-income households may surprise you.

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A recent report from the Peter G. Peterson Foundation, which details how households have used the three stimulus checks issued so far, notes an interesting pattern that emerged with the third round of stimulus checks.

According to the report, only about 19% of recipients spent the $1,400 stimulus money from the third round of checks shortly after receiving it. This money, which has been issued over the last few months, was part of Biden's American Rescue Plan package that was passed in March.

In total, more than 165 million Americans have now received their payments, bringing the total amount of payments to about $388 billion for this latest round of checks.

This spending pattern differs vastly from the first round of stimulus payments. When the initial round of $1,200 checks were issued in April 2020, the unemployment rate was at its highest point of the pandemic. At that time, about 14.7% of Americans were unemployed, and nearly 75% of U.S. households spent the stimulus on crucial expenses like groceries and rent.

That spending pattern changed by the time the second stimulus checks rolled out in late 2020 and early 2021. While many households reported that they still used, or planned on using, at least part of the second and third payments for expenses like food and rent, only about 22% of American said they planned to use their stimulus money primarily on rent, groceries, or other household bills.

Rather, these households -- which included lower-, middle-, and higher-income households -- opted to either save the full or partial payments instead. And, as noted above, only about one-fifth of Americans used the full $1,400 from the third stimulus check for bills and rent.

These trends, while perhaps surprising, may not have been occurring for the reasons you might expect. While higher-income households may not have had as pronounced a need for the stimulus money, lower- and middle-income households aren't saving the money for the same reasons.

How income affected stimulus spending

According to the data, all households of all income levels were more likely to have spent the first round of payments. The hold-outs were primarily higher-income families, who were much more likely to have saved the money or paid down debt with the first round of stimulus payments.

That higher-income savings trend became even more pronounced with the second and third round of payments. With the latter two checks, more higher-income households held onto the money or put it toward paying down debt.

What was interesting, however, was that the trend of saving stimulus checks started to include more lower- and middle-income households with the second and third rounds. But, unlike the higher-income households, the lower- and middle-income families who saved their stimulus money likely did it for much different reasons, according to analysts.

While higher-income families may not have needed the extra cash for crucial bills and opted to sock it away instead, it appears that the lower-income households were simply more reluctant to immediately spend the second and third round of payments due to the uncertainty of the pandemic.

So, rather than use the checks immediately, the lower- and middle-income households who held their second and third checks appear to have tried to make the funds stretch as far as possible. This, rather than a lack of need for the funds, is what likely led to less immediate spending.

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