When US stimulus checks arrive, people will spend them on consumer staples, after which prices will rise.

Judge on what happened after the CARES Act Economic Impact Payments arrived (April-June 2020). True: spending data or studies show recipients spent a large share of the checks on consumer staples (food, groceries, household essentials), and prices of those staples rose afterwards (e.g. a rise in the CPI food-at-home or household-supplies index in the months after the payments). Mostly true: staples were a leading use of the checks and staple prices rose, but other uses (e.g. saving or paying down debt) were about as large, or the price rise was small. Mixed: only one of the two parts held, either staples spending or the staple price rise. Mostly false: the checks went mainly to saving, debt or non-staples, with only a minor staples effect, and staple prices were flat. False: neither the staples spending pattern nor a staple price rise occurred.

Set before the research began.

1. E1 How Did U.S. Consumers Use Their Stimulus Payments? NBER (Coibion, Gorodnichenko, Weber; NBER Working Paper 27693) · 17 August 2020

   “Most respondents report that they primarily saved or paid down debts with their transfers, with only about 15 percent reporting that they mostly spent it.”

2. E2 Household Spending Responses to the Economic Impact Payments of 2020: Evidence from the Consumer Expenditure Survey U.S. Bureau of Labor Statistics, Office of Survey Methods Research (WP-544) · 4 January 2022

   “people spent roughly 10 percent (standard error 3.4) of their EIPs on non-durable goods and services in the three months of arrival, with little evidence of additional spending in the subsequent three months or on durable goods.”

3. E3 Majority Who Received Stimulus Payments Spending Most of It on Household Expenses U.S. Census Bureau · 24 June 2020

   “About 80% of these respondents reported using it on food, and 77.9% on rent, mortgage and/or utilities, including gas, electricity, cable, internet and cellphone.”

4. E4 New Research: CARES Act Checks are Being Spent Quickly on Essentials | Columbia Business School Columbia Business School · 21 April 2020

   “individuals that received stimulus checks spent an average of a third of the checks at a rapid pace on household needs like food and rent, and then kept the rest in their accounts”

5. E5 COVID-19 Federal Aid and Household Food Expenditures | Journal of Agricultural and Applied Economics | Cambridge Core Cambridge Core (Journal of Agricultural and Applied Economics) · 4 November 2023

   “Of the respondents who had received a payment, 64% indicated allocating at least a portion toward food expenses with an average of 38% of the payment being spent on food.”

6. E6 Income, Liquidity, and the Consumption Response to the 2020 Economic Stimulus Payments University of Chicago Booth School of Business (faculty page for Constantine Yannelis) · 1 January 2024

   “Relative to the effects of previous economic stimulus programs in 2001 and 2008, we see much smaller increases in durables spending and larger increases in spending on food, likely reflecting the impact of shelter-in-place orders and supply disruptions.”

7. E7 COVID-19 Federal Aid and Household Food Expenditures | Journal of Agricultural and Applied Economics | Cambridge Core Cambridge Core (Journal of Agricultural and Applied Economics) · 4 November 2023

   “Past work has indicated a substantial portion of CARES Act economic impact payments were allocated toward investment, savings, or debt repayment.”

8. E8 The impact of the COVID-19 pandemic on food price indexes and data collection U.S. Bureau of Labor Statistics, Monthly Labor Review · 8 November 2020

   “The food at home price index increased 4.3 percent (seasonally adjusted) from March to June 2020 after rising 1.1 percent over the previous 12 months.”

The food-at-home price index rose 4.3% from March to June 2020 (E8), so the price part held, although the window starts before most payments arrived. For spending, food and household bills were the most commonly reported uses among people who spent their checks (E3, E4, E5, E6). However, other studies found most recipients mainly saved or paid down debt: only about 15% reported that they mostly spent the money, and roughly 10% of the payments went to non-durable goods and services in the three months after they arrived (E1, E2, E7). The evidence on staples spending is divided. Some studies report food as a common or large use of the checks (E3, E4, E5), while others found that most of the money was saved or used to pay debt (E1, E2, E7). So only the price part of the prediction clearly held.