Cowen Expects Lower-Income Spending From Stimulus to Fuel Growth

Though consumer spending intentions are largely “stable” after issuance of $1,400 stimulus checks, the economic package “should provide another leg of growth within consumer sectors,” Cowen wrote investors Friday on the impact of the $1.9 trillion stimulus bill signed into law March 11. A Cowen survey of about 2,500 U.S. consumers showed households expect to spend about the same in the upcoming month vs. the previous month: 17% plan to spend less, 14% more. Cowen expects a disproportionate amount of spending to come from lower-income and displaced employees receiving "outsized" benefits from the fiscal package. Employees laid off during COVID-19 had significantly higher spending intentions at 36% vs. a 14% average, said Cowen. Twenty-two percent of laid-off consumers intend to spend less. On how they expect to spend stimulus funds, 23% said to pay down debt; 17% on food, household supplies and personal care; “other” items (13%); mortgage/rent (10%); clothes/shoes (4%); and healthcare expenses (4%). Cowen noted a considerable uptick in travelers through Transportation Security Administration checkpoints beginning mid-March. It forecasts 1.1 million to 1.6 million TSA travelers around Memorial Day weekend. A year ago, Cowen analysts didn’t expect a third round of stimulus and think it will take time for people to repair personal balance sheets, especially those who lost jobs. “As it happens, the US government has been very supportive of both its citizens and of the airlines, and as a result, we believe people have some money with which to travel, and they are.” Analysts envision a “jailbreak” this summer among consumers who have been cooped up at home. They see Americans traveling domestically to national parks, beaches, golf resorts and other places with outdoor activities where they can continue social distancing.