Over the past few days, Americans have begun to see stimulus payments arrive in their bank accounts, issued as part of the U.S. government’s latest COVID-19 relief package.
The $900 billion bill, which was signed by President Donald Trump on Dec. 28, contained several measures to inject much-needed funds into the economy, including direct payments of $600 per person (with reduced amounts for those earning more than $75,000), plus $600 per child.
Leaders from throughout the retail industry cheered the introduction of the stimulus bill.
Matthew Shay, president and CEO of the National Retail Federation said in a statement last month, “Retailers are encouraged by the passage of this economic relief package that will keep the economy open and moving in the right direction as the fight against the COVID-19 pandemic continues.”
He added, “These are trying times for many American families, and a strong stimulus bill is critical to the continued recovery of the economy and the retail industry, which creates employment for 52 million working Americans.”
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But how much does the retail industry actually gain from government stimulus checks? If the round of payments last year are any indication, the benefits are not necessarily direct or immediate.
A report from Coresight Research tracked how Americans used that first set of payouts, which were $1,200 for the average person and began to roll out in April. The study found that consumers primarily used the money to meet basic needs or financial obligations.
About 44% said they spent the funds on bills, including for utilities, cellphone, cable TV and vehicle payments. And roughly one-third told Coresight the money went toward food items such as groceries, eating out and takeout.
Still, Matt Priest, president and CEO of the Footwear Distributors & Retailers of America, is confident that some consumers — once their most urgent needs are met — will be in the mood to shop this winter. And that will be a boon for beleaguered storeowners.
The industry leader told FN last week, “Any time you inject more cash into the American economy — these kinds of direct payments have been shown to improve economic activity, [particularly] in the short term,” Priest said, drawing a comparison to impact of annual tax refunds.
“People get tax refunds and they go out and spend that on discretionary items, including footwear — as we’ve consistently seen,” he said. “I’m always blown away by the fact that when that money gets into the system, footwear retailers really see an impact on sales.”
– With contributions from Sheena Butler-Young