Effects of stimulus checks on spending patterns of different economic groups

This paper uses daily anonymous aggregated trans-action data to analyze the changes in consumer spending caused by receipt of the stimulus payments in the United States during the COVID-19 pandemic. The stimulus checks were provided as part of the CARES Act aiming to provide emergency assistance for individuals and businesses affected by the pandemic. We analyze the impact of the receipt of those payments on the aggregated daily spending of different socio-economic groups and industries. We show that the transaction patterns of low spending consumers were most impacted by the stimulus payments among different spending groups. Our study results also indicate that the consumer responses after the first stimulus check (April 2020) were substantial and significant on industries that sell daily essential items, whereas consumer responses after the third stimulus check (March 2021) were significant in non-essential goods (e.g. luxury and entertainment sector). The results of this study are of crucial importance because they could help policy makers better shape stimulus payments that may be needed in future emergencies.