As the United States nears the seventh month of weathering COVID-19’s impact, it has become clear that the economy will not recover simply by encouraging businesses to re-open or consumers to keep shopping. Working adults with children are being disproportionately affected by COVID-19 and will continue to struggle without stronger federal and state support for child care.
The way policymakers and financial capability practitioners communicate about the CARES economic impact payments and other current or future payments may help guide households to use these benefits in the way best suited to their financial situation. This is important because while some households may use the CARES payments to pay down debt and other households may be fortunate enough to be able to save their payments, others will need these payments to simply make ends meet.
While economic impact payments are different than a tax refund, we can be fairly confident, based on this research, that in this moment of emergency, payments from CARES Act will be used on essential purchases. It is also possible households will allocate their economic impact payments to clear debt entirely or to make a minimum payment in order to keep some liquid assets in checking or savings.