Retailers are hoping Americans will spend their stimulus checks, but a new survey suggests they will bank some of it in their savings accounts instead.
Eighty percent of U.S. recipients said they plan to save the money, at 48 percent, or pay off their debts, at 32 percent, according to Refinitiv research. Fifteen percent, or about one in five Americans, will spend it, while the remaining 5 percent will invest the funds, per the data collected in collaboration with Maru Public Opinion, a panel and data service insight firm.
A research note from Refinitiv analyst Jharonne Martis said the savings rate suggests that Americans are still “concerned about the pandemic,” and they could be building up their emergency funds in response.
According to the U.S. Bureau of Economic Analysis, personal savings rates were at 7.6 percent at the beginning of 2020, but shot up to 33.7 percent in April 2020 during the coronavirus pandemic. Personal savings rates tend to rise during economic downturns, Martis said. “This was also seen during the global Great Recession (December 2007—June 2009), when several financial institutions fell and consumers were worried about job security,” she added. Last year, the savings rate declined as consumers increased their spending during the summer and into Amazon Prime Day in October, but spiked again when December stimulus checks were distributed in January. That resulted in the personal savings rate reaching 20.5 percent.
Those who elect to spend their stimulus checks won’t be purchasing apparel. Respondents to the survey who said they will spend the money indicated that most funds will be used to buy groceries and pay for basic living expenses, such as electricity bills.
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Some of the respondents said they will invest in home renovations. “Lowe’s and Home Depot continue to see sales growth from the previous quarter of 12.9 percent and 4.9 percent, respectively,” she noted.
The textiles, apparel and luxury goods sectors struggled during the pandemic. And while some consumers will be spending their stimulus checks on fashion, footwear is the category that Martis expects will see the strongest sales.
“The pandemic has shifted shoppers’ preferences towards comfort versus fashion. Therefore, footwear makers Wolverine World Wide and Crocs are expected to see a rise in sales from the previous quarter,” she said. “Crocs is also expected to see a 56.7 percent jump in same store sales for [the first quarter] 2021.” In the leisure products sector, Martis said Callaway Golf as a candidate that could see the biggest improvement in sales from the prior quarter, with sequential growth at 52.4 percent in the first quarter from the fourth quarter of 2020.