New • COVID-19 Report

Part 2: The Bump then Grind - the follow-on to the UI Stimulus

Thursday, December 17, 2020 • 4:00 PM EST

Key Takeaways:

1. UI beneficiaries and non-beneficiaries have converged to be approximately equal overall, however, we see an inflection point in how much (and where) people are spending.
2. Those who received the $600 weekly unemployment benefits continue to spend more on car rentals, clothing and accessories, and education than those who did not.
3. However, there are some categories where non-beneficiaries spend notably more than their counterparts; namely beauty products and restaurants.
4. Sectors including hardware, computers and electronics, and grocery and wholesale saw a spike in spending since the beginning of the year.

As the COVID-19 pandemic approaches its 1-year anniversary, its toll on the American economy has become unmistakable. The onset of the pandemic led to widespread job losses, pronounced declines in spending, and a newfound respect for telecommuting. 

In mid-April, the United States government signed into effect a stimulus package that offered unemployment insurance (UI) benefits to the tune of $600 per week to those who lost their jobs in light of the pandemic. This sudden cash injection, the administration hoped, would encourage Americans to spend money and jumpstart the lagging economy. 

In September, we took a closer look at spending data across a number of common categories for American consumers to better understand how people put their stimulus checks to work.

Today, we have an updated look at consumer trends for Americans who received at least one UI Payment from July 15 to September 30th of 2020, and a comparative analysis against the spending habits of Americans who did not get a stimulus check.

Once again, our data makes clear that this $600 per week supplement had an effect on spending habits. Further, the recent expiration of these benefits resulted in another inflection point in how much (and where) people are spending. . 

When compared to data collected over the summer, spending habits among UI beneficiaries and non-beneficiaries has converged to be approximately equal overall, and indeed, to be roughly equivalent to spend at the beginning of 2020. However, this aggregated view does not tell the full story. 

Below are our observations of pronounced differences between the two groups in spending patterns for a few categories. We analyzed spending differences across various other industries, of which the data is available upon request.

Are we there yet?

Whereas spend on airlines looks relatively consistent between recipients of stimulus checks and people who did not receive checks, spending habits on car rentals diverge sharply between the two groups. In late October, stimulus recipients were spending 540% that of non-UI beneficiaries on car rentals, and while the gap has lessened somewhat, UI beneficiaries are still spending 70% more than people who did not receive stimulus checks. . This is a departure from our findings over the summer, when UI benefits did not appear to have an impact on spend in this category.

Since the summer, UI beneficiaries have also demonstrated a greater proclivity to stay in hotels or short-term rentals, compared to people who did not receive stimulus checks. Though spending on hotels is down from the summer (and from the beginning of the year), UI beneficiaries are still spending 20% more than non-UI beneficiaries on lodging as the holidays approach, and the gap seems to be widening.

Put your face on

Over the summer, Cardify saw spending on apparel and accessories increased for both UI beneficiaries and non-UI beneficiaries. That said, those who received stimulus funds increased their purchases of these goods significantly more than those who did not. Today, while UI beneficiaries spend about 20% more than non-beneficiaries on clothing and accessories (and 90% more when compared to the beginning of the year), both groups are trending upward in terms of category spend.

A key trend is emerging in beauty products. It is one of the few categories in which non-UI beneficiaries are outspending stimulus check recipients. Stimulus check recipients spent 30% more on these personal care items by 30% compared to the beginning of the year, but non-beneficiaries have upped their spend by a whopping 40%.

Another category where non-beneficiary spend outpaces that of beneficiaries? Restaurants. Whereas non-UI beneficiaries maintained consistent spend on dining when compared to the beginning of the year, stimulus check recipients decreased their spend by 10% in recent months as COVID cases rose across the US.

Investing in the future

We previously noted that non-UI beneficiaries increased their spend on education by 148% from April 14th to August 11th, whereas UI beneficiaries increased their spend by over 5x (528%) over the same time period. Spend has since declined precipitously, though stimulus check recipients are still spending more than non-UI beneficiaries.

Hey big spenders

There are categories that saw significant increases in spend since the beginning of the year. In addition to a spike in clothing and accessories spending among both UI and non-UI beneficiaries, hardware stores, computer and electronics, and grocery and wholesale saw increased activity (by 80%, 70%, and 50% respectively for both groups of consumers).

Pronounced changes in other categories

The availability of $600 weekly UI benefit created sharp divergences in spending habits between those who received their government-issued checks, and those who did not. Our research is just a sampling of what we believe to be the most compelling data points .It will be important to continue monitoring American spending habits over the course of the next several months as we head into the holiday season to determine the longevity of the effects of the $600 weekly benefit boon. If you are interested in learning more about other spending categories, please reach out to us.