As lawmakers on Capitol Hill continue to squabble about a future coronavirus stimulus package that would put more money into people’s pockets, today brings fresh evidence that the first round of direct payments did, in fact, stimulate the economy.
Walmart cited the payments as one of several galvanizing factors that boosted its sales and profit in the second quarter of 2020, during which America’s largest retailer reported earnings per share of $1.56 on revenue of $137.74 billion. Analysts had expected EPS of $1.25 on revenue of $1.35.48 billion, according to a consensus estimate cited by CNBC. The retailer’s same-store sales in the United States rose 9.3%, better than the 5.4% expected by analysts.
With Americans sheltering in place and avoiding public spaces, Walmart said its U.S. online sales for the three-month period ended July 31 grew a staggering 97%, with “strong results across all channels.”
The IRS began sending out the first round of $1,200 stimulus payments as far back as April. Even though the Democratic-led House passed a bill that would include future payments the following month, Congress has so far failed agree on a new package, and chances are dim that it will happen before the end of the summer.
In addition to Americans spending their stimulus checks on merchandise, Walmart said its gross profits were helped by lower gas prices and a general shift to sales of higher-margin items.
That the stimulus payments factored into Walmart’s rosy earnings is not a surprise. In April, a survey of 1,592 Americans found that roughly 22% of them planned to spend their stimulus money on either essential or nonessential items, and about half of those said they would spend it at a big-box retailer.
Another ongoing study, this one from the Kellogg School of Management at Northwestern University, found that people with less than $500 in their bank account spent nearly half of their stimulus check within 10 days, a finding that bolsters the notion that direct payments to Americans can help businesses and boost the economy.