By NYJAH BUNN, KYANA COLEMAN, LUCAS DAY, BEN GOLDMAN, TAYLOR HAELTERMAN, JORDAN MEADOWS & RUI YAN
Capital News Service
LANSING — Mark Pontoni plans to donate to food banks about half the money he receives from the federal stimulus program intended to fight the economic consequences of COVID-19.
“Everybody can use extra money, but right now I think that if you’re in a position to help out, I think you should do it,” said the 65-year-old East Lansing High School teacher.
Deion Harris plans to invest in bitcoin.“Online currency is the way of the future for real,” said Harris, 21, a Ferris State University student. “It’s an easy way to flip your money.”
Most American adults will receive $1,200 and another $500 for their dependent children under 16. While the federal government figures out how to roll out the program, many people are already planning what to do with the cash.
A random survey of Michigan residents found that many want to save it, given the uncertainty of the length of the crisis. But they also said it’s a tough line between impulse buying and saving.
“I really need to save it,” said Bree Cleveland, 21, of Oak Park. “I shouldn’t just spend it all on clothes or something, but I know I probably will.”
If it makes such people feel any better, spending it is exactly what economists want you to do.
Some recipients will be tempted instead to save their stimulus money or pay off student or other loans, said Michigan State University economics professor Charles Ballard.
Paying down debt is an understandable impulse, Ballard said. “I wouldn’t be upset at people for saving their money and being worried about their future economic state.”
But the economy as a whole would benefit more if people spend their checks in ways that rapidly circulate through the rest of the economy, he said. The idea is to give money to people who support businesses that keep workers employed so those workers can earn money and spend it at other businesses and continue the cycle.
“Get more money in somebody’s pocket, cut their taxes, write them a check,” Ballard said. “And then they will spend that money and they’ll go to this business or that, and those businesses will get more money than otherwise and will be able to stay open.”
One challenge: Many businesses – restaurants, nail salons, retailers – are closed. People couldn’t spend there if they want to, Ballard said.
Still, buying is on some minds.
“I just moved in, so I’m probably just going to use it on furniture and other things for my apartment,” said Rio Martinez, 32, of Auburn Hills. “I did say that I would get my kids some toys too.”
Others plan to both spend and save.
“If I receive a check, I will buy furniture for my living room and more stuff for my son whom I am expecting in July,” said Shatorra Powell, 22, of Detroit. “Then I’ll save the rest.”
Rent is a priority for Julia Rose, a Michigan State student living off-campus.
“I miss my family,” said Rose, who said she’ll pay off the remainder of the year’s rent and move back home to northern Michigan.
Berkley Sorrells continues to live in an MSU dorm. But she also plans to use the money for rent.
“I move into a co-op in May,” Sorrells said. The $1,200 would help with her first month’s rent.
Tyrell Slappey said he hopes to catch up on outstanding bills: “It’s a couple things I’m behind on so I’ll be catching up on things to get into a proper place.”
The 39-year-old Detroiter said he hopes the government will send another check as the stay-home order has been extended until April 30. Another check would help him stay ahead.
And others will use the money to stay healthy.
“Seriously, I’m not thinking about shopping at the mall right now,” said Yihan Cai, an MSU senior. “I would spend it on more practical things like buying vegetables and fruits or buying paper rolls and hand sanitizers.”
Students may be conservative about spending because some colleges and universities have offered tuition refunds and housing credits. Lenders are allowing people to defer car payments. Evictions and water and power shutoffs are sometimes deferred.
Fraser resident Charliah Morgan, a junior at Howard University in Washington, D.C., said she’s unworried about the economy and the virus. She looks forward to when she can be with friends.
“If I receive the stimulus check, I’m putting it into my savings,” Morgan said. “My work-study job and real job are still paying me.”
Nyjah Bunn, Kyana Coleman, Lucas Day, Ben Goldman, Taylor Haelterman, Jordan Meadows and Rui Yan write for Great Lakes Echo.