The Downfall of Consumer Spending

In the race to elect a new President, the talks of a second stimulus check came to an abrupt halt. What does this mean for businesses and the economy? A stimulus check was granted to Americans during covid-19 in an attempt to keep the economy on its feet. A Wall Street Journal article, Winter Without Stimulus Is Double-Whammy for retailers, touches on the importance of stimulus packages for businesses, consumers, and the economy in the near future.

Stimulus Packages are Necessary

The Pandemic we are all living through has affected the economy in more ways than one. Unemployment rates reached an astonishing 14.7% at the peak, leading many Americans to face the undeniable truth that they may not be able to afford basic necessities. By providing the citizens with stimulus checks, the Government has the goal of pumping money into economy, hoping people will spend that money on goods or services. A poll taken by CNBC, found that 49% of people said they decreased spending over the past 12 months and plan on continuing to save. Uncertainty leads to people wanting to save, which drastically affects industries and the economy. Stimulus checks will provide consumer incentive to spend which will help keep businesses and the economy stable. Additionally, businesses will use that money to pay off wages, which in the broader scheme of things, fights unemployment rates.

No Stimulus, No Economy

Many Americans simply do not have enough money to pay off their bills or even buy groceries. Families with children struggle even more financially. CNBC states that 14% or 46 million people wiped out their emergency savings during the pandemic. Without a much-needed stimulus package in the fourth quarter of 2020 or early 2021, consumer spending will take an even bigger hit than it has in the past couple of months. This directly puts much more stress on businesses. Covid businesses shut down, an article from fortune.com states that 100,000 stores that were temporarily shut down, are now permanently out of business. After all, if people have no money to spend, businesses cannot thrive, and the economy cannot either.

‘Tis the Season to Shop

With the holiday season around the corner, many retailers and businesses heavily rely on sales in the upcoming weeks. If consumers have to focus on day-to-day living expenses, how can they afford to shop? We will start to see even more businesses filing for bankruptcy and forced to close their doors forever. The more businesses that fail, the worse off the economy will be. Stimulus checks are desperately needed, not only to keep the economy steady, but, to help families all around America. It is essential that we see a package coming out in the near future.