Congress passed several federal coronavirus stimulus checks during the COVID-19 pandemic. These stimulus checks have helped millions of people across the country, and there is a variety of data to prove it. Yet many have argued that the federal government was not doing enough to help Americans. However, recent data from the Federal Reserve suggests otherwise.
Federal Reserve data shows a drastic increase in the total amount of cash Americans carry on hand. U.S. households collectively held about $1 trillion in cash or cash equivalents in their accounts in the fourth quarter of 2019, according to the Federal Reserve.
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However, as of the second quarter of 2022, the total account balance rose to $4.7 trillion, according to Federal Reserve data. This increase in wealth is the highest in more than seven decades of collected data.
Many attribute this drastic increase in checking account balances to federal coronavirus stimulus checks. There is another piece of data to support this belief.
According to data from the US Bureau of Economic Analysis, the savings rate in the country has increased to 17% in 2020. It was the highest personal savings rate since 1944, when people saved about 28% of their income during World War II.
It should be noted that federal stimulus checks for the coronavirus rose to about $1.5 trillion. However, the fact that bank account balances grew much more strongly suggests that people used the money wisely, for example by investing in assets that gave them attractive returns.
Aside from wise investing, the increase in wealth can also be attributed to stimulus benefits at the state level. Since the COVID-19 pandemic, many states have come up with one or more such benefits. Some states still continue to send stimulus money in some form.
Has the federal government spent too much money?
The federal government has approved three rounds of stimulus checks since the COVID-19 pandemic. The first round of $1,200 was approved in March 2020 under the CARES Act, the second round of $600 in December 2020 under the Coronavirus Relief Act, and the third round of $1,400 was approved in March 2021 under the American Rescue Plan Act.
Many argue that the federal coronavirus stimulus measures could have been more targeted. According to one estimate, about 9% of taxpayers received the stimulus money whether they needed it or not.
There are arguments that the number of people actually spending the stimulus money decreased as more stimulus money was approved. Americans used the first stimulus check largely for household expenses, while the later checks were typically used to pay off debt or save. Such a trend was visible in all income levels.
Many also believe that too much money is also responsible for the current record high inflation.
