There are no restrictions on how the stimulus package can be used, and many Americans spent them on investing. They buy stocks, securities, and cryptos.
To handle the consequences of the coronavirus pandemic that badly affected the economy, Donald Trump’s administration announced a $2.2 trillion stimulus package known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The package allowed millions of eligible U.S. residents to receive $1,200 stimulus checks to cope with the financial effects of the coronavirus crisis. While the stimulus checks were intended to be used to stock up on essentials, many Americans spent the money for other purposes, like trading stocks.
Americans Used Stimulus Funds to Buy Non-Essentials and Cover Bills
During the first phase of stimulus checks, Americans used them to buy essentials. In mid-April, they spent the money on everyday means, like gas, groceries, pharmacy purchases, food delivery, and takeout, etc. As the demand for deliveries has grown, retailers like Walmart and Target have seen a hike in online sales. Both have reported keen demand for TVs, electronics, gaming equipment, and apparel.
Besides, many people used the money provided by the government to clear their bills. For example, families in McAllen, Texas, covered 96% of their $3,500 monthly bills with the stimulus checks.
Coronavirus Stimulus Checks Invested in Crypto and Stocks
There are no restrictions on how the stimulus package can be used, and many Americans spent them on investing. The software and data aggregation firm Envestnet Yodlee checked bank account transfers of 2.5 million Americans who received checks and made the following conclusions. After receiving stimulus checks, those with annual earnings between $35,000 and $75,000 increased stock trading by 90%. Those earning $100,000 to $150,000 annually increased trading by 82%. Americans with annual earnings of over $150,000 traded about 50% more often.
According to Envestnet Yodlee’s Bill Parsons, after allocating coronavirus stimulus checks, securities trading soared.
“Securities trading did see significant lift week-over-week and I suspect that that’s in part due to big changes in the market.”
People have also invested in Bitcoin and other cryptos. The leading crypto exchanges Coinbase and Binance have reported a soar in buys. In April, Coinbase CEO Brian Armstrong shared a graph of user activity and showed that more transactions were made of exactly $1,200.
— Brian Armstrong (@brian_armstrong) April 16, 2020
Coronavirus Stimulus Package Not Enough to Deal with the Crisis
The money that the US government allocated to prevent the economic crash is not enough to protect the Americans. Therefore, democrats in the House of Representatives have offered a new coronavirus stimulus relief bill that presupposes the second round of $1,200 stimulus checks, or up to $6,000 per household.
The proposal comes when the U.S. government is still sending its first stimulus payment under the Cares Act.
You can read more about coronavirus updates here.
Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.