They Worked: Claudia Sahm on the effects of $1,400 relief payments on families and the economy

In one of the first studies of the effects of $1,400 stimulus payments issued under the American Rescue Plan, “They Worked: The effects of $1,400 stimulus checks on families and the economy,” JFI Senior Fellow Claudia Sahm draws on new survey data demonstrating how families made use of the third round of cash relief.

Over the course of the COVID-19 economic crisis, Congress has enacted about $5 trillion—one quarter of annual GDP—in fiscal relief. At the heart of this bold policy response was “economic impact payments”, often referred to as “stimulus checks”, to most families. This research brief argues—contrary to several prominent critics—that the stimulus checks, including the most recent $1,400 payments under the American Rescue Plan (the “Rescue Plan”), provided much-needed relief to millions of families and helped bolster the economy at a critical juncture in the recovery.

This evidence-based brief draws on newly available data from the Surveys of Consumers at the University of Michigan, known as the “Michigan Survey”, to assess the effect of the final round of stimulus checks. I find that most families needed the checks and many—even those with higher incomes—spent them quickly, helping reignite the economic recovery after it stalled in the winter.

The stimulus checks represented real money for Americans—money that millions of Americans needed as they grappled with the pandemic’s economic fallout. A family of four (with two adults and two young children) received up to $11,400 from April 2020 to March 2021, equal to 17% of median household income in 2019 for all Americans and 25% for Black and Hispanic families.

Read the brief here.