The U.S. government passed the largest piece of stimulus legislation in our nation’s history to allow people to keep paying their bills during the forced economic shutdowns due to the coronavirus.
Consumers, in turn, used a lot of that money to speculate in the stock market.
Securities trading was among the most common uses for the government stimulus checks in nearly every income bracket, according to software and data aggregation company Envestnet Yodlee. For many consumers, trading was the second or third most common use for the funds, behind only increasing savings and cash withdrawals, the data showed.
Yodlee tracked spending habits of Americans starting in early March and found that behaviors diverged around mid-April — when the checks were sent — between those that received the stimulus and those that didn’t. Individuals that received a check increased spending by 81% from the week prior, and data show some of the spending went to buying stocks.
People earning between $35,000 and $75,000 annually increased stock trading by 90% more than the prior week after receiving their stimulus check, data show. Americans earning $100,000 to $150,000 annually increased trading 82% and those earnings more than $150,000 traded about 50% more often. “Securities trading” encompasses the buying and sells of stocks, ETFs or moving a 401k.
Yodlee’s data is based on bank account transfers of 2.5 million Americans that received checks.
“There’s clearly a correlation between Covid and people being reengaged with their money,” Bill Parsons, Group President, Data Analytics at Envestnet Yodlee told CNBC.