By Stephanie Asymkos
Originally published by Yahoo! Money
One expert is calling for a second round of stimulus checks to offset the financial strife experienced by struggling American during the coronavirus pandemic.
“We do need another round of stimulus,” Bill Parsons, group president of data and analytics of Envestnet Yodlee, told Yahoo Finance’s The First Trade. “The first wave of stimulus checks were absolutely needed.”
While it’s too early for analysts to make conclusions on the data, but Parsons said the stimulus checks are “proving effective” particularly for the country’s lowest income earners who make less than $50,000. For them, week-over-week and year-over-year spending increased 81%.
“Those folks...they used that money to pay necessary bills: rents, mortgages, auto loans and pay down debt,” he said. “So, my sense is we do need another round of stimulus, but we’ll leave that to the leadership in Washington to make that particular decision.”
How are people spending their stimulus money?
In households and individuals making under $75,000 annually, Parsons saw spending in education, home improvement, opening stock and trading accounts, and utilities.
In contrast, those in the upper-income strata are using their stimulus for debt, insurance, travel, home improvement, and electronics, Parsons said. He continued to say there’s a “slight rebound” in the travel and hospitality sectors with hotels and flights starting to be rebooked.
What will the second round be spent on?
Stimulus funds have proven useful in providing relief but needs are still going unmet as national unemployment continues to swell. If the second wave of relief money does materialize, Parsons said “it’s too early to tell” how it will be spent and “we'll certainly know more in the next three to four weeks.”
However, in the last four weeks, discretionary spending is trending upwards with confidence resuming in categories like apparel, retail, and electronics.
Who should receive a second stimulus check?
Parsons said that a second round funds should probably be funneled to those who need it the most.
“The lower-income was quite active in taking that stimulus money, saving it, and then spending it on these essential items,” he said. “It did look like a greater need was occurring, is occurring, in the lower-income strata.”