October 23, 2009
In May 2008, the Internal Revenue Service (IRS) started mailing Economic Stimulus Payments (also called tax rebates) to an estimated 130 million income tax filers. Nearly half (49 percent) of recipients reported using the rebate mostly to pay off debt.
Most other recipients reported either mostly spending the rebate (30 percent), or mostly saving the rebate (18 percent).
Consumer units with at least one parent and qualifying child were about two to two-and-one-half times more likely to use the rebate to pay off debt than they were to spend it.
However, single parents were much less likely to save the rebate than husband and wife families with children. Comparable consumer units without children (husband and wife only or single person 18 or older) were similar to each other in their propensities to allocate these funds: Less than one-third spent the rebate; less than one-fourth saved it; and most of the rest (well under one-half of the total) used it to pay off debt.
These data are from the Consumer Expenditure Survey. For more information, see Consumer Expenditure Survey Results on the 2008 Economic Stimulus Payments (Tax Rebates). A consumer unit consists of any of the following: (1) All members of a particular household who are related by blood, marriage, adoption, or other legal arrangements; (2) a person living alone or sharing a household with others or living as a roomer in a private home or lodging house or in permanent living quarters in a hotel or motel, but who is financially independent; or (3) two or more persons living together who use their incomes to make joint expenditure decisions.
Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, Pay off debt, spend, or save? The 2008 Economic Stimulus Payments at https://www.bls.gov/opub/ted/2009/ted_20091023.htm (visited July 29, 2021).