BOSTON–The recent stimulus funds that recently hit many members’ savings and checking accounts is unlikely to flow back out, according to one national report. For credit unions, it will mean ongoing strains for loan-to-share ratios and capital levels.
“…The reality is that most Americans right now are much more likely to save the money they receive,” reported the New York Times. That analysis gels with a report in CUToday.info in mid-December in which Moebs $ervices reported that of the $3.4 trillion in stimulus money from April, much of it is still in deposit accounts at financial institutions, and a large percentage is in checking—$1.3 trillion or 38.3%.
The Times report included interviews with numerous people who said they had no real need for the funds. But it also noted many have a dire need.
“Of course, the money will be a lifesaver for the roughly 20-milion people collecting unemployment benefits and others who are working reduced hours or earning less than they used to,” the Times reported. “Yet, for the majority of the estimated 160 million individuals and families who will receive it, spending the money is expected not to be a high priority.”
The Times noted that after an earlier round of $1,200 stimulus checks went out in the spring, the saving rate skyrocketed and remains at a nearly 40-year high.
“That largely reflects the lopsided nature of the pandemic recession that has put some Americans in dire straits while leaving many others untouched,” the report stated.
‘Much More Efficient’ Use
Several experts told the Times a truly stimulative package would have earmarked the payments for those who need it most — the unemployed.
“We know where the pockets of need are,” Greg Daco, chief economist at Oxford Economics, told the Times. “Putting it there would be a much more efficient use of the stimulus.”
As part of the most recent stimulus, individuals with an adjusted gross income in 2019 of up to $75,000 will receive the $600 payment, and couples earning up to $150,000 a year will get twice that amount. There is also a $600 payment for each child in families that meet those income requirements. People making more than those limits will receive partial payments up to certain income thresholds.