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Were last spring’s coronavirus-related cash payments used mostly to either pay down debt or increase savings?

Wednesday, January 6, 2021
By Sabrina Scoggin
YES

As part of relief measures enacted in March 2020 in response to the coronavirus pandemic, Congress authorized direct payments of up to $1,200 per individual. On average, 42% of the funds was spent, while 27% was saved and 31% was used to pay off debts, according to calculations by the National Bureau of Economic Research.

With shutdowns closing shops and businesses and limiting travel and leisure activities, spending favored food, health and beauty aids and household products.

The maximum payments were limited to individuals with incomes under $75,000 and phased out for individuals earning more than $99,000. Lower-and middle-income households tended to spend more heavily than higher-income households, which tended to either save the funds or pay down debt. Among households earning less than $75,000 annually, 80% spent their payments primarily on expenses.

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